AI Concentration: The guest highlights pervasive AI-driven concentration risk across portfolios, noting the top-heavy S&P 500 and how many assets now act as leveraged AI bets.
Diversification Approach: He advocates reducing overexposure to tech via Equal Weight indices and quality tilts, noting historical cycles where equal weight outperforms market-cap weight.
Inflation Hedges: Suggests adding Inflationary Assets such as energy, rail-related industrials, and select utilities as counterweights for growth-heavy portfolios.
International Exposure: Sees opportunity in International Stocks, especially Europe (energy/defense policy spend) and select Emerging Markets, with a preference for careful country/sector scrubs over broad indices.
Private Credit: Provides a deep dive on the rise of Private Credit post-GFC, its appeal (steady returns, low reported vol), creeping risk (weaker loan standards), and potential for ripple effects if multiple shocks align.
Private Equity: Warns that Private Equity faces return headwinds (overpaying, volatility laundering) and broader social/economic risks from widespread roll-ups and limited exits.
Semiconductors & Earnings: Notes Semiconductors as critical to index earnings concentration, underscoring fragility if AI-related leaders stumble.
Macro Framing: Discusses equity risk premium dynamics, institutional asset-liability matching, and a plausible bull case if ongoing fiscal deficits keep supporting earnings and risk assets.
Transcript
Hit it. It's Friday, June 5th, 2026, episode 292. I'm Kevin Mure. This week, Patrick has buggered off and left me alone. But have no fear, I've replaced him with someone better. It's my great pleasure to welcome to the show Matt Ziggler. Matt helps clients transform complex situations into actionable plans as managing director at Sunpoint Investments, where he oversees strategy and client communications for over $4 billion in assets. You can find him online via the Excess Return podcast, as a senior editor at Panop Panoptica. Yeah, I guess that's how I say it. In collaboration with Epsilon Theory, and via his cultish creative brand where he has written daily for eight years and hosts his blind introduction podcast, Just Press Record. Matt, thanks for coming on the show, buddy. >> Kevin, a long time coming. First time >> long time listener, first time caller. >> Very excited to be here. By the way, you were telling me, you know, that uh we were talking about how to pronounce your name and you told me, you know, Ziggler and then you said what what the kids told you in uh in elementary school. Was it like tell them >> you got to carry your traumas with you top of mind at all points. So when I actually there's two things with my name. >> The first is as dear Amanda told me in kindergarten, your name rhymes with jello jiggler. Thank you permanently in my head. And as Grandma Ziggler taught us all to say and carried down by my mom, no one can spell my last name >> because there's even there's a local apple cider brand or whatever that spells it like the wrong way. >> Everybody puts ZIE and that's wrong. So she taught us to say I before E except after Z. >> Okay. By the way, when you said the jello jiggler, all I could think about was Dirk Diggler. So that's you're the finance version of Dirk Diggler. That's how I'm going to think about you from now on. all boogie nights all the time as you know. Okay. So, listen, you are um just one of the my favorite guys to listen to in terms of all your podcasts and all your different creative things that you do and we always have so much fun when we chat offline. And I when we were writing it was when we were kind of organizing this, I said, you know, my worry is we're not going to talk enough about markets. So, what I'm going to do, >> my goal is to just train wreck this. I'm trying to bring down the quality of the market huddle. I Patrick's gonna come back and be like, "What were you even doing? This this wasn't even a finance show." >> Well, you got to tell people what Jack, your your your co-host of your podcast, said when when you said you were appearing on our show. >> Credit to Jack Forehand, the perennial roller of clips, as I introduce it constantly with him. Jack literally said, "Why do these macro shows invite you on when you just never talk about macro with them? You just derail them." He's like, "Is this your strategy for excess returns? you're just gonna destroy all these other brands with your nonsense and hope that we're the last one standing. And he's not wrong. He's not wrong. >> Okay. So, what we're going to do is we're gonna start with markets. We're gonna go straight into it. We're not going to We'll get to your terrific uh story of your life and everything else afterwards, but we're going to start with markets. This is just a fascinating time because I I don't know how you and your clients are dealing with it, but it feels like all that anyone cares about is AI. So, let's just let's just jump right into it. What are you thinking in terms of this? How do you make sure that that doesn't become the overwhel overwhelming focus of everyone? And like, how do you deal with the FOMO that people must be experiencing in terms of when they're seeing these things explode higher and they're not stuffed to the gills with SMH? Well, the problem the problem with it and forget just SMH, we have to broaden it out is no matter what you do, everything has just become a leveraged play on AI, right? You could very easily have, oh, I have my diversified portfolio of stocks and bonds and well, yeah, I own the Q's and I own my private credit who's financing the data centers and you look at this thing and it's all just a giant bet on one thing which is AI drives all growth in the world and everybody and God help you if you're it's going to take your job, too. So, so what do you do about that? Like how do you deal with in constructing portfolios telling, you know, explaining to clients what they should be thinking about? Um because it it see it it feels to me like it's extremely dangerous. And you highlighted the concentration risk. I just look at the S&P 500. What is it? The top 10 stocks are 40% of the index. That's crazy. >> 40% of the S&P in in 10 stocks. And that's basically driving it. And again, back to forget where you work. forget all the parts of your own life that are dependent on these areas. So with people, the conversation is always mapping the exposure across your entire situation. And and I'm not just talking about your portfolio. You actually have to map it across your life. If you work in an industry that can be disrupted, do you read Kaioo's stuff? Have you seen much of Kai's stuff? >> Kai's great. This is a hard plug for Kaiu at Sparkline Capital. >> I see him on your show. He he hosts every now and then. I do I did see him interview a few people. He Kai is excellent. He's done all this work on basically why value investing doesn't work anymore. How you basically have to re understand intangibles and their role in the process. And he basically looks at he just published this absolutely fascinating piece about how value as a factor still works so long as you break apart the disrupted industries from the industries who have been regularly immune for whatever reason. They have they have something. So like as an example, places that are surprising that AI is disrupting is the retail sector and there's all these weird so beyond the software stocks and the obvious ones that have just gotten blown to pieces. Interesting dispersion trade inside of that. But just in retail alone where all of a sudden it's are we going to sell more stuff online? Is this going to change supply supply chains and vendors and orders and just the way things are secured by the customer? That's really made a giant impact there. And what he's basically said is if we look inside, if we look subsectors at who's basically been blown up by AI is going to come eat your lunch versus AI hasn't really figured out how to eat your lunch yet, the value factor actually still works in this side of the house. >> Oh wow. I didn't realize that. >> Wild the parts of data. >> So inside of a bunch of these things, we're looking at people's life. We're looking at their portfolio. We're looking at that balance sheet and we're saying what parts of this are we overexposed and are we comfortable with that risk? And you could be comfortable with that risk because you've got a lot of years in front of you. You could be comfortable with that risk because you just have it inside of an index fund and we understand the balance of that and what you need it for in 5, 10, 20, 50 years, your grandkids, whatever the situation. And if you're not comfortable, then what do you lean on to do about? And one of the biggest things to lean on to not do about it is just go buy stuff that's not tech. If you have to have stock exposure, get non- tech exposure. If you have to have fixed income exposure, get away from private credit or stuff that's levered up to the tech industry and lending in those places. And that's that's a herculean effort right now. >> And so how do you do it? like is it by individual stocks and like moving away from indexes or do you the thematic sector index uh ETFs like walk us through kind of what you know if I came to you and said you know I'm looking to invest this little nest egg that after I selling market huddle for you know hund00 million to Spotify I need you to take care of my money and I'm really worried about being overexposed to AI what would what would that portfolio look like? Yeah. So what that portfolio starts to look like is basically again we want to wait away from what what we're concerned with or what we have too much of. So some of the conversations are what are other places if you're heavily growth andoriented you're probably underweight a lot of inflationary assets. Likewise you talk to some of the I'm saying this lovingly some of the crazy trader types who are up to their ears in uranium and oil and stuff like this. >> We do financial planning. >> I feel seen. I feel seen. A big part of what we do, like we work with some some asset managers. We work with some traders and other people on the planning side where we're not even doing their investment portfolio, but we're trying to make sure stuff is okay in their life around the parts that they have control of. And this is a regular conversation in both directions. The person who's been all in on growth and AI and is just up to their gills and if this doesn't work, they're screwed. the other person, >> you might fall find yourself in this camp who is just like beating themselves doing that what's like the monk who's like slapping the the spikes onto their back and they're like oil and gas miners uranium. >> I like the the the uh the thing I wrap around my leg and I tighten it up. Like that's the one I do because nobody sees that one. >> Like what's his name in Billions? Paul Giamati's character where he's the rubber bands. you're like, "Oh man, that guy exists. They didn't fictionalize that that guy is in a room with you and you don't know it." So for those people though, you have to find the counterweight. If you're all in on growth, we're going to talk about and depending like if you sell it for $100 million, we're probably looking at private opportunities and other things too where it's, hey Kevin, what's your inflationary asset like exposure? because we should probably talk about things like rail cars and energy and some of the other sectors, utilities that you're underweight that aren't historically correlated over market cycles with this giant tech investment. Likewise, on the other side, if you've got all the oil and all that stuff, it's let's get some exposure to just broad market beta. Let alone, even if you're not going to go out and buy the SMH or whatever else, let's get you some exposure so that you have some balance to what's actually here, which is businesses are going to innovate. They're going to figure out a way to turn their lights on tomorrow. Some businesses are going to get carried away and do reckless and stupid things. other ones are going to find ways to basically be self-defeist even though they're trying doing the right thing and we just want that exposure because the equity premium equity risk premium actually exists. I do believe this is a thing and I am willing to stake people should have some exposure to that asset class. >> You know what's hilarious? I actually made some questions like I was like okay I'm want to ask them and things like that and that was one of my questions. Does the equity risk premium still exist and is there any point of even thinking about that? So, you beat me to the question. Explain to people what the equity risk premium is. Explain why it hasn't worked yet and why you think it's so important. >> Stocks should return more than bonds. Bonds should return more than cash. And that's basically the idea that there's a risk premium inside of each. I could go into the way deeper boring conversation, but let's just put it on there. the way that I will regularly explain it to my mom or somebody who basically we never had a conversation at my table about finances that wasn't oh crap how are we going to afford this or pay for this or something that felt like stress >> okay >> so there was no stock trading conversation at the table that was reserved for somebody else nobody explained it to me sometimes on NPR in the car they would say something and it would seep into my brain but there was something called the DAO and it sounded scary >> so when I'm explaining it to somebody like that it's like, you know, McDonald's, you know, people work there. You know how the lights got to get turned on and turned off at the beginning of the end of the day? They have to figure out how much to charge for that Big Mac and those chicken McNuggets and those golden French fries and even the salt and the oil and the fry later to make sure there's enough money tomorrow that they can just turn the lights on again, right? and that company in having to constantly make that decision over and over and over again, that thing that keeps them in business is this idea called the equity risk premium. And it basically says the risk of making sure we can turn the lights on tomorrow. If we succeed, we stay just barely one step ahead of inflation, just barely one step ahead of what it costs to hire people, and just barely in business where our real estate and everything gets taken care of and we earn the right to fight another day. And that's very different than if I'm lending somebody money to go do something and I'm locking in the rate and I'm fixing it. Sure, I got to think if they're going to pay me back or whatever else, but that's way different than taking this entrepreneurial bet that I'm going to be able to turn the lights on tomorrow. >> So, the person who turns the lights on tomorrow, they get to earn a little bit more money. The person who just gives out the loan, they get to earn a little bit less. If you put it in the coffee can in the backyard, you know, you're probably going to be poor unless the whole world melts down and then you're going to wake up in the middle of an apocalypse one day and who really cares? That's no fun. >> Okay. So, the equity risk premium is in essence the the difference in the earnings yield of the stock market versus the 10-year or whatever fixed income instrument you want to use. Yeah. And one of the problems with it is that when you look at the returns, the equity risk premium and and like just as an example, in 2020, the 10-year bond was what 1%. And I think the earnings yield on the S&P 500 was five or six. it was it was up there. So the equity right so the equity risk premium was four to 5% meaning that that was the extra um return that you should expect to own stocks over bonds and at that point made sense because nobody wanted to buy stocks everyone wanted to buy bonds because although we all forget this people were really bearish right and nowadays it's flipped we have this situation where the earnings yield is four or something like that I can't remember the exact number and the or three and a half or something and the and the 10ear is 4 and a half so it's actually negative. Um but one of the problems is that when you look at the earnings the equity risk premium and then you plot the next year's returns there's almost no relationship right so this is what the push back that you get from everyone is like why are you talking about you know bonds going down so therefore stocks going down it doesn't work I take it you probably have a different view about that why don't you explain to people why it does work and at what time frame it works >> you know do you remember the things you're not supposed to talk about at parties or at social gatherings ings and events equity risk premium. We're going to get back to it. Definitely don't talk about that. And but there's a reason why. So you're not you're not supposed to talk about religion. You're not supposed to talk about politics. That's the general rule. >> Okay? >> When we talk about stocks or we talk about bonds, we talk about any investing strategy. As I love to remind people, they're religions. Like they're crazy people. Religions don't often cross. The kids at the local Methodist church don't usually wander down to the synagogue and join. Once in a while it's gonna happen. Little Johnny's bar mitzvah, everybody gets together. Yeah. >> You know, Marky's confirmation, everybody gets together. But we don't mix religions. And when we start to talk about, well, surely equity investors are going to go, look at the yield on bonds right now. Let's sell off our stock exposure and go buy bonds. Unless there's a bar mitzvah, those Christian kids aren't going to hang out with the Jewish kids at the synagogue. It's not going to happen. So most of the time, these religions never mix and never cross. And we talk about them in this academic fishbowl like this is the way we should do it. Like we're all of a sudden we're rational actors again. I'm sorry, that's not the way it works. The person who sets up shop as a lone shark isn't really worried about going to become an equity investor. And the equity investor, the entrepreneur, isn't worried about becoming a lone shark. this stuff doesn't cross except for in rare occasions >> right >> now. When it does, that's when all of a sudden a there's opportunity and something is going on. But that's for people like like us, like me, like you, people who are allocators or willing to zoom back and say when stuff gets really weird, there's an opportunity. >> Yeah. >> But most of the time, don't expect anybody to arbitrage this for you because this is the separation of churches. They all believe different things, >> right? And and to be fair, like if you think about the big money that will make those changes, they operate on such a slow time scale, right? It's the endowments, it's the pension funds, and like, you know, I've had experience with these guys, and they take forever to make a decision, and then when they make a decision, it goes on for, you know, months and quarters and years. But it it it is a slowmoving process. But anyways to the back to the point about the equity risk premium although it doesn't work over the next year in terms of predicting the uh the returns of stocks when you take it over the next five or 10 years it becomes very clear what so what does it say now? Well, so what's really important about this is when we start to look at over multi-year periods, this gets important for those big institutions, especially the ones who do asset liability matching in any way, shape, or form because they're trying to pre-plan future outflows, expenses, other things that they have to get in line for to say, I just need this endowment distribution to be safe in five years. I just mean need this defined benefit pension plan to have distributions for these right retirees and this demographic pool in years five through seven here and here's how I can lock this in. So what's happening right now is you have the ability in a lot of these giant entities where they can look forward and say I can asset liability match with these bonds better than I can do that with these equities >> right >> that does move the needle and it can happen over a period of time it's very interesting to look at the perceived equity risk premium now trading at a a high valuation relatively speaking in stocks we have a middle valuation relative to bonds and fixed income neutralized view on inflation and that does I mean, when we're talking to endowments or large institutions or people who are doing that asset liability matching exercise, they're going, I have a way to solve for three, five, and 10 years out right now, if I just lock in some rates, >> right? >> That's going to be money that's coming out of stocks. And that's part of a bigger flow story that Yeah. Everybody should be aware of. You have to solve it for yourself first, though, >> right? Fair enough. and and obviously you know one of the things that your theme is that you are tailoring portfolios to each individual and that is going to vary and there's no doubt about that but in terms of when we're just talking about the macro environment and different views that you might have what do you feel about that um earning uh sorry that stock overvaluation and what has caused it you know like AI is one of them but that's just that feels like just the the the the the the kind of the party of the day. The reality is that we've been going up ever since what 2020 in terms of what we were experiencing in terms of overvaluation. And all you have to do is look at like, you know, it's outdated, but look at the Warren Buffett indicator versus the GDP, right? We should have in 2020 it that should have been the top and yet here we are. We've exploded to absolute huge numbers. Does that worry you? Yeah, it's terrifying because it feels awful. It feels awful. The only solace that I take and I know you're a fan of the Ed Yardinis of the world and some of these people who track earnings expectations and then what actually gets delivered. The only good sign in in this whole thing is that we've been sitting at lofty valuations for basically since right after COVID. Yeah, we had the blip in 2022 when everything sucked and nothing was fun and everybody was miserable because stocks and bonds both went down at the same time and it was awful. But since then, we've basically seen a giant earnings recovery. We've seen a giant revenue recovery. We've seen a giant cash flow recovery on the equity side. So, when we just zoom out and we look at index level valuation at 20 times earnings on the S&P 500 or wherever right now, we look at that number and then we say, well, how have earnings done in the last one year, two years? how's forward expected going? And you go, we're treading water at a 20x multiple, >> right? >> It's hard to hate treading water if we're actually getting the growth that's delivered, >> right? >> So, this makes me sick to my stomach because that's a really high growth rate to keep putting up, but I like the idea that we've actually kept putting it up, >> right? >> So, we've grown into this earnings. Now the problem with that is the index constitution has also evolved over that fiveyear period and now a lot of that growth I forget what the stat is Cameron Dawson had it the other day it was like Micron and somebody else are basically all the earnings growth this year 50% of the earnings growth this year >> the surprise I think for this quarter or whatever at the very least it was all from those two >> so when all of a sudden you start breaking down that most of the earnings growth is coming from a very narrow sector that makes me feel like this is fragile and this goes back to that argument You're probably overexposed to AI. If you're an index investor or just a generic allocator of capital, you're probably already overexposed. So, what are you doing to lessen that exposure and trying to do it in profitable qualitydriven places that will still allow you to keep your equity risk on the table, but not chase that 20x multiple? Because we've all seen the nonJP Morgan guide to the markets presentation where it's like, here's the S&P 500, but let's net out that mag seven. Let's net out that top 10. Let's just look at where the Russell 2K is trading. Let's look at these other factors and say maybe it's not as expensive as we thought. And in some cases, the earnings are keeping up. That's always where you want to be as an equity investor. >> Okay, let's talk a little bit about that. The other day, I was watching uh another podcast. I won't say what it was, but these uh there's two very famous guys. There's one guy's on CNBC all the time and he started making fun of equal weight and saying like why would anyone want to ever be an equal weight? That is the stupidest thing I've ever heard. And I was like just shaking my head. And he and what was was kind of shocking to me was he wasn't aware of the like you know decades of research that show that equal weight actually beats um market cap weight and the reality is that the guest kept trying to tell them no this is a function of the last 10 15 years before that equal weight has crushed everything else and the only reason people don't do equal weight is because if you're a large institutional investor you can't do equal weight you're constrained by the fact that the you know you need to go market cap weight to get the liquidity. So first of question to you is do you agree that equal weight should outperform over the long run and is this just um uh a blip in time and what is driving that and should people be considering that as a way to diversify and to you know push back on all the concerns that you have in terms of the concentration risk. I I want to lever the very poetic term that I know is borrowed but applied here. I feel like he deserves credit. So Mike Green, everybody's favorite person next to Cliff Vases to have a argument with on Twitter. Mike Green has referred to again very poetic, can't stress this enough, the inshitification of the index. Yeah, >> you heard. Yeah. Okay. the the inshitification is when you and we have these these updated rules for fasttracking. S&P just shot down the stuff for the SpaceX inclusion last night. >> We'll talk about that. We'll talk about that. >> Crazy crazy seeing that break this morning when I woke up. But this idea of back to just generic stock exposure and I'll tie this to the equal weight. If you have an index that is comprised of large free float adjusted profitable companies, that's a pretty good bar. Like the the the S&P equal weight, that's a pretty good bar of companies that have now scrubbed out the problematic nonprofitable trash, the junky stuff that you'll find in your in your Russell 2Ks that you'll find in some of your other places. And because of just size and momentum, it's a pretty attractive set to start working from. Even if you were going to construct a 30 stock portfolio out of that, this is a great starting point of just what the S&P 500 is. That's why it's worked so well as a free float adjusted market cap benchmark that we all look at and talk about way way too much. Been in the business long enough to remember what everybody still talks about the Dow and that conversion and that education cycle because life is weird like that. We shouldn't forget it with equal weight. Equal weight and free float adjusted market cap weighted because I feel like we have to say the whole thing for the last month because all we talk about is AI IPO inclusion in these benchmarks. >> They just dovetail like market cap weighted leads then RSP leads or then you know whatever the equal weight ETF lives. >> So they they flip back and forth and they move in like three or five year cycles. You can do a lot by just rebalancing them on re relative strength if you wanted to. There are entire relative strength strategies. I think Dorsey Wright even may still run one that was literally which one is the leading horse in the race and then we just pile onto that until it works until it stops working and then we flip back to the other one. I have no problem with that as a structure for actually managing money or thinking about this in concept. And right now in particular when we know we have this giant overweight and we have this earnings risk and whatever else. If I can just retreat back into quality and still keep my equity exposure on because I believe in the equity risk premium of McDonald's pricing the chicken nugget right that's a good place to be. So I'm actually very optimistic about having an allocation to equal weight instead of market cap weighted. I think it's smart. You have to be aware when sectors get chunky or clunky inside of it. been leerary about it when you get into like that 20 or 30% financials or you get there's just too many companies doing the same thing that's a different type of concentration risk. >> Yeah. >> But you can very comfortably and you can go test this on your own kids. It's fun. Back tests. What do you want to take an equal weight index and blend it with a quality or a momentum or a pick your whatever your factor of choice is that makes you happy to see those stocks in it. Very complimentary. really helps smooth the ride over time and it keeps you away from the trash at the top and the low end. >> Okay. Um the other thing that is seems to no longer work that used to be a staple of uh portfolio construction is uh emerging markets or foreign markets where >> who are they? >> Yeah, >> we shut down the didn't we build a wall? Do we allow those funds into portfolios in this country? I know you're in Canada, but >> tell us what how you view those as a you know in terms of constructing a portfolio and is their day coming. >> My favorite this is going back. I learned a lot in the post financial crisis period in the Zerp era >> working with a bunch of defined benefit plan clients and and setting up because they changed the rules and the regulations in there and a lot of smaller companies were able to set these things up. And the problem was you're setting up these things that have a in many cases a 4% or a 5% growth hurdle and they were setting them up in this zerp world. And so you had to solve for how are you going to hit the 4% hurdle rate when treasuries are zero and that's what you're supposed to be using. So there was this giant opportunity to rewrite all these investment policy statements and go in and help people go here's how you solve for your hurdle rate in this new weird environment. >> Okay. So >> put me back on track with this. Where was the >> So emerging markets, foreign markets in terms of portfolio construction. >> So we're doing this. We're looking at earnings yields around the world and thinking about this. And I had it was a guy at Fidelity. I can't remember who it was, but it was a guy at Fidelity. We're talking through this and he says, "You know what's weird about Europe is half the index is this pre-rexit that whole weird state that they were in where you buy a truck in Switzerland and it's got to go through the bank in Germany and now the balance of payments was all screwed up and everything." He went, you know, if you just exclude all the financials in Europe, it's not a half bad index. It's like most of these companies are there to lose money. So if you just got rid of all of them, you actually have a very investable index. And that really rewired my brain on the the dash to whatever that was emerging markets in the year right after the GFC to that period of where you were looking at Europe in the 2014 15-ish era and saying, "Hey, if we just figure out what parts of these to include and which parts to exclude, you actually have some really valid businesses there." And I think right now today in 2026 when we look at emerging and we look at Europe and we look at developed international, you can go to Japan, you can go to these countries and you can find good businesses at decent prices with good growth profiles, >> right? >> And if you're trying to lessen US tech and you're having trouble doing that with equal weight or you're scared about going smaller cap because there there is a lot of junk and stuff that doesn't make sense or that's likely going to get disrupted by AI. I see no problem with having the international diversification on the table, but you probably are going to scrub that a little bit more than just the top level indices which don't always connect you to the story and the exposure you actually want. >> Do you have any ETFs that you could tell people to go have a look at or or do you think that they should be actually picking stocks and making portfolios? >> I think you can pick stocks and make portfolios or choose active managers. I think if you're going to pick either country or you know factor ETFs, you have to just look at how it relates back to the rest of your portfolio. I can't for regulatory purposes discuss the tick. >> Okay, fair enough. Understood. I didn't mean to put you on the spot. >> Yeah. Yeah. Okay. So, um maybe you could talk about countries you like the most or are there not like the most that intrigue you the most and think that offer the best opportunity. >> This is I'll just you know you this is why I read Rupert Mitchell. This is why I we read people who are like, "Do you know about this closed end fund in Austria or whatever?" Random stuff. That stuff is fascinating to me. I I think generically speaking, you want to have some awareness or exposure to Japan and whatever the heck they're going to do with this energy situation. Look wherever dollars are flowing. Same thing in Europe. There's a bunch in continental Europe where between Germany and the UK, they have to solve a bunch of these problems around energy and defense. And if governments are throwing money into situations, there's going to be some businesses who figure out how to not just turn their lights on the next day, but maybe make an extra buck on the side. >> Okay. >> Um I don't know if you're going to You can duck this one if you want, but what about your political situation in terms of in the States? It's a little more divisive than it has been in the past. Do you worry about that as a like a as a risk factor? Like do you think that that should do you think that geopolitics should go into anyone's um portfolio construction in any way? >> I think politics should not because politics are a religion. >> Okay. >> And I I say this this is the I love looking at people for the composite religion that they're made up of. It's really a fascinating thing because you don't see this in regular religion. somebody doesn't again back to the you don't cheat on the Methodist church with like a little synagogue on the side but you'll talk to the the hardcore Republican who went to the Birkshshire meeting who wants an allocation in SpaceX. They exist. You probably know six of them. >> Okay, let's talk about SpaceX then. Let's go all the way politics. Yeah, politics are religion, so you have to assess them. My role in my seat is not to judge anybody for their religion. I'm agnostic as the day is long with this stuff. I have to be aware if somebody's coming into the table with those beliefs and then try to decolor that view from their glasses of saying >> let's not make the decisions based on the politicians or the religions that we sign up for. policy on the other hand, >> okay, that's a better way of putting it because I would say that I'm very similar in that I always say I don't let politics get in the way of a trade. Like if I thought that, you know, XYZ politician, I hated the guy, but I thought it was going to result in the stocks going higher. I'd buy the stocks. I'm not going to sit there and like go I'm not going to buy the stocks because of that. Like they you have to go to where the trade's going. So anyways, going back to policy, do you worry about the American policy then being disruptive and uh a bigger risk factor in terms of owning the US market? >> Yeah. And I think we should redirect this global too where it's not only do I so the US policy has become a concentrated bet on growth in AI that this is going to solve all of our problems. >> Oh, I see. Okay. So that's a big weird risk where the government is now directing money in a policy direction towards investing in an industry that probably doesn't help us out of a lot of problems if we actually get the result that we're investing in. So that's a big red flag of just concern that one has to have in portfolio construction. But likewise, you want to look at you want to put the blinders over the politician and you want to look at the policies in place. Okay. >> So, that's where I'm saying when we're talking about Europe and we're thinking about defense and energy, you don't have to know anything about German politics. You just have to know they're a giant manufacturing base of a country who has to solve a massive problem. And if they're going to deficit spend their way into stimulating the economy to like solve this problem, there's going to be money to be made. >> Okay? And so, policy should inform some of those. You can be tactical with policy decisions so long as you depoliticize your view. Uh you talked about deficit spending and you I know you've interviewed some folks that are like MMT sympathetic. Uh >> sympathetic. >> Uh I would love to know in terms of economics how you view the last five years in terms of this newfound willingness to spend in fiscal. Um, one of the things like as you mentioned the 2020 how we had an expansion in terms of uh valuations in this in the private sector. I think that that's very simple. You can explain it with fiscal spending. The reality is the fiscal government's deficit is the private sector's credit and it's like all you have to do is look at the actual accounts and you can see it. I was wondering where you stand on understanding those things in in terms of the fiscal debate. Is there an accident coming? Like are we have we become too comfortable with deficit spending? And do you worry that all those folks that you know that used to warn us about the the the worries about inflation and and bond market the bed have all seemed to be the biggest proponents now of deficit spending and have completely forgotten their old views. And do you worry that it's going to bite us just when no one's expecting it? >> It's going to bite us. I don't think it bites us probably as soon as the fear it warrants. This scares the crap out of me. I'll explain what I mean by this, but I do think I do think 2020 was a real eye openener because in 2020 we got the fiscal stimulus that all the Kugman's and the Bernanes and the Cash for Clunkers program couldn't deliver on coming out of the GFC, >> right? and everybody, all those guys were saying, "We need fiscal and monetary together if we're going to move the needle on this." And that was where all the inflation was supposed to come from and why it didn't show up. And that was also where a lot of the growth potentially was going to come from to help heal this thing. Neither pro nor anti- policy in that as a stabilizing mechanism to do it. But for some reason, it didn't happen after the GFC in 2020. >> Oh, for some reason, we all know what it is. Tea Tea Party and everyone hated Obama. If it was a Republican in in power, it probably would have happened. >> Yeah. >> Right. Okay. >> That was the push back. Otherwise, we would have bigger programs. I don't think we would have had programs of the size that we got during the pandemic, though. >> No, I completely agree. The pandemic allowed really crazy things to happen. Anyway, I interrupted. Keep going. >> No, this is it. It allowed crazy things to happen. And the worst part of it is it's like the person who's never gambled before and walks into the casino and wins on the first hand. Every This is my my counter generational theory, whatever explanation that I think is really important that I just this just sits in the back of my throat choking me all the time lately. Those those boomers, they get a they get a deservedly bad rap in a lot of categories, but they were raised by depression era parents or people who went through hard stuff and they're I'll spend the interest. I really don't want to spend the principal, but I will. Not going fiscal kind of felt right to them for the most part. And then they got to do this fiscal stimulus. they got to do the stimulus that was the size relative to relative to GDP was the same size as what we did during the Great Depression during World War II coming out of it in the amount and quantity of money that was spent and they went whoa that worked pretty well and now they're not the problem though because they still have the fear of their elders in their DNA. The problem, dear Gen X and millennial friends, is that we have now watched them get to do stimulus and have all the goods and the next generation of politicians, I fear, just warn learned the worst lesson of gambling, which is they won on the first hand and they thought that that was skill and something that they can replicate and pull off to their own to their own great reward. And I am genuinely genuinely scared that we've now learned this lesson of what fiscal can do and we haven't overshot it in the other direction yet. >> And I do think at some point >> you don't think we've I >> Can you put the toothpaste back in the tube at this point? >> No. No. But you don't feel like we've we've overshot it. Like I I might argue and and I >> are we in a depression? >> No. But I would argue that the fact that we haven't gone back to 2% in inflation is the fact that it's very simple to me. it's that we're spending too much. And I've always like this is my problem with the MMTers is that you know and I am very MMT sympathetic and I think that explains almost all the plumbing issues. So I I'm a huge fan there with you on this. >> Yeah. So I'm a huge fan, but I always my push back to them was during the 2020 they said there, you know, a lot of the old school economic people told us that they can't the government can't spend their way out of this problem. And I always said no, if they have the they have the actual will, the political will to do it, they can do it. And and I always said the government is never financially constrained. It's always real resource constrained. And up until the point when no, you know, before all that spending, there was lots of spending to be had. And once we had inflation, it showed we overshot it. And this is the problem. And I'm sympathetic to the people who push back on MMT and say the problem is that once you teach people this, they won't stop. And I think that's what's happening here. And this is what I've always argued is that and and you know, we're at 3% inflation. And you know, the the Republican uh le Fed chair is trying to argue that we should have lower rates, right? And and not only that, the Republican president is running a 7% deficit to GDP. This is this is the good times and we're running this and it just like it's insane. So you you said in there though you think it's going to take longer for those you know those that those chickens what is the the roost to come back or whatever like basically >> the roost. >> Yeah. So why do you feel that way >> when WY Coyote runs off the cliff? >> Yeah. >> He doesn't just fall. >> If you or I ran off the cliff we would fall. But Wy Coyote, he gets out 10, 20, sometimes like 50 yards and then he has to hold a sign up. A sign. I don't know how far out over the canyon we are. We are out. We have wy coyoted off the cliff. Nobody's held a sign up yet. I don't know if they're going to, but Acme and whatever is gonna break our poor little road on our hearts out here, I I just think that that can continue further than we appreciate because I think the juice from stimulus is so strong that until some >> we need not just one thing to break, we need two or three things to break. And this is true of every crisis. One thing does not create the crisis. Markets basically go up on a string of news and we don't have a bad market, a bare market, a recession until the bad news just won't stop showing up. >> Okay, >> we have not seen anything like unrelenting bad news basically since the GFC in this country. Even what we saw during COVID, that was a microcosm of of the day after day after day where you check the screen to see how far financials were down that day because keep splitting the difference to zero, guys. Let's see what happens. We're wy coyotes out over the cliff. That's all I can tell you. >> That is awesome. Um, okay. You want to talk or I want to talk as well about private equity and private credit. Tell us what you see from your vantage point. um as an allocator, as a person that talks to people in terms of where the mistakes have been made, and I know you're going to allude to the fact that too many people have exposure to the same things over and over again, but talk more as well about the whole volatility laundering, as Cliff Asnice says. I would love to get your your viewpoint on that. And then finally finish it up with is this like the is this the thing that's going to drag the wy coyote down? Like is this going to be the the the final the brick that they're the anvil that they hand them that is going to cause the gravity to finally kick in? >> Oh, Acme, you're just waiting out there for us. I want to make sure we talk about both of these because I think they're both really interesting and important to actually put some nuance on. So, let's talk about private equity and private credit separately because I think they both have a place. >> Let's let's start with private credit because I think that's I don't think people I did an exceptional interview with Mark Rubenstein. Have you had Mark on before? Right. Net Interest >> Mark you get those guys that are that are more cerebral than us. >> We get guys that we get guys that just compare >> Yeah. We got guys to compare wy coyote running off the cliff. >> This is true. I would never be a guest on my own podcast, >> right? They wouldn't take you. >> They wouldn't take me. Would never make it through the filter in there with the crypto scammers and the junk email robots. >> So Mark explains and this is this is such a fantastic point. He's been a financials analyst since the 90s and he ran a long short fund through the GFC. He got involved in some other funds and stuff in the period both before and after, but he just understands the plumbing of the banking system better than anyone I've ever met. And Net Interest is a Substack. Wonderful, wonderful read. Absolutely worth checking out. And talking to Mark about this, the history of this industry, I think, is just really important to understanding what it is and how we got here. A super highle version is basically in the GFC, we constrain bank lending. You're a middle market company. a bunch of those loans, mezzanine debt, all that stuff basically changed how you could do that because we had to protect banks balance sheets and we said now for you guys to be in this special isolated class too big to fail you have to let go of this and so this cottage industry crops up in its wake and it's basically an unregulated banking entity and private credit is born out of investors saying oh I can make this loan okay the bank won't do it I can charge a little more interest. This sounds like a good business deal. And as more entrance came into the place in the period, especially in the Zer period post GFC, we saw a lot of people, a lot of capital get attracted to this. And as capital gets attracted to it, you start looking at other things to make it better. You know what makes everything better? Leverage. Of course it does. Why would leverage make anything worse? And so we start figuring out these clever ways. And really over the last 10 years, this has sort of fast-tracked where you have this giant unmet lending need inside of middle market companies and you now have a private credity credit system that can lend money to all these entities and basically say we'll do it on some leverage. So you can go out used to be you were a family office or you were an institution and you go out and you say okay let's give a million dollars to this private credit manager. They issue a bunch of floating rate notes or loans. You got to do your due diligence on all these things because stuff gets weird fast. And they go, "Okay, they're going to get us five, six, seven percent. It's floating. When they lever it up, I got 10, 11, 12." And what that started producing somewhere in the ballpark of 10 years ago is returns that literally just go up and to the right >> with no draw down or almost no draw down. >> Here's 10 or 12% a year. You know what'll make your uh fixed income allocation really sexy, really good, really, really strong. better than junk bonds. Hear that? Better than junk private credit allocation. And so we started getting those things. Now here we are, another one, big gift to the industry. COVID happens, don't really have to mark any of that stuff down. 2022 happens. Bonds get basically punched in the face. They do the wy coyote out onto the cliff and come down as much as stocks. Terrible year. But guess what doesn't go down? Guess what saves a lot of fixed income allocations across family office or raas or other people who are allocating this space? Private credit, >> right? >> Because your bonds got sucked. But this thing didn't budge and it put up like eight or 10% on that year >> income. Like it wasn't just flat. It was actually up. >> Uh you know what? I'd have to look back at the like you'd have to pull up the Cliff Water benchmarks or some of the other ones that are more reputable benchmarks to reference off of. It could have been a flat year, but generically speaking, on a relative basis, >> it was huge. >> It was bigger than huge. It was one of those outlier things where you own 10-year treasuries at the right point through the GFC and you went, "Hey, look, one positive number on my screen." >> Right? So that volatility laundering aspect of not admitting that a lot of those loans were in trouble or that was scary during that period basically says for the last three years now the amount of money they've been able to raise off of what happened during the 2022 cycle has been bananas. So two years ago, we have a lot of exposure v via a handful of different managers and a lot of it's like legacy exposure that people have had and we started in due diligence meetings to come up with some weird bad somebody's talking you through loans and you go, I didn't know you guys did uh vehicle financing. It's like, oh, we just got into that. Well, tell me a little more about the vehicle financing. Well, it's more motorcycle financing. Oh, that's interesting. I watch Sons of Anarchy. What kind of motorcycle financing? Well, they're kind of subprime motorcycle loans in uh South Korea, you know, near the border. Like crazy stuff like this. Really? Yeah. We start you start firing managers because you go, if if you're letting this happen, there has to be some other shenanigans that are going on in this portfolio. >> The stuff you're telling me about. >> Yeah. because every follow-up question led to a slightly more crazy sounding thing where again I've seen this movie before. We need to get away from it. So, you know, my director of research would come back from a meeting and he'd say, "We got another weird one." And we systematically started just firing and exiting a bunch of these managers. And this starts in that period right after 22. So like 23, 24, the quality factor on a bunch of these managers starts declining. And that tells us that loan standards had dropped. Too much capital had come in too fast in the push because again these are providing liquidity to middle market banks in the firm in the form of loans and notes. When those standards drop, you get some middle market bad actors that are looking for silly things like motorcycle lease financing at the subprime credit >> on the North Korean border or the South Korean border. >> Yeah. some absolutely just please keep me as far away from this as possible unless you're the mob in which case we need a different arrangement. I don't want to be a I don't want to be part of this situation. >> So private credit fills a lending need in the economy that we actually have no other source for. >> Okay. >> So I don't think private credit just goes away. I don't think private credit is at the grandest statement bad. The problem is we have an unregulated banking entity basically functioning inside of the United States and abroad. And if you're not doing extreme due diligence on who your managers are or how you're allocating to this, it's like buying a regional bank that's doing all sorts of batshit crazy stuff. That is the risk if you don't ask the question. However, if you took all of private credit and it's a multi- trillion dollar industry right now, you would lose a multi- trillion part of the banking system, >> right? That's not a viable solution. It's really important >> now. But but to your point though about too much money came in there and chased it. Um >> does the wash out cause enough problems that it actually affects the economy. >> You need three things to happen at once. You need three things bad in a row. You can't just have one bad thing. We can't have first brands or one of the other ones blow up and have a headache. We need to have a couple of these companies get sucked into a bigger scandal, a bigger problem, and then have an So, if we had, let's not use data centers. Let's, let's say we find out all of a sudden one of them is financing a bunch of Medicare driven nursing homes and all of a sudden the crackdown on employees in that space heats up again. We have uh a rolling over in the unemployment numbers in that space. Now there's not enough people to staff them. Now, Medicare is cutting funding, which Medicare just did. This is another big policy announcement in the last u it was made a while ago, went into place a few months ago. It's causing all this stress in that space. So now, if you have a bunch of lenders to people in a place where we see a downturn, that can spread because now we have a bigger problem that's impacted in two or three areas stacked on top of each other. These one-off things suck. Some people lose money, but it's it's like a hedge fund blowing up, >> right? If you have your money in it, this sucks and it's no fun, but it's insulated, >> right? >> Stack a few of these things on top, you could have a ripple effect that takes way more down with it. >> Okay, so at the beginning of this conversation, you asked me to you asked to separate the private equity and private credit. You talked about private credit. Let's talk a little bit about private equity. >> You take the equity risk premium and you do that same thing. Everybody's favorite thing, the best, most beautiful thing in all of finance. You lever it up. That's all private credit or private equity is just that's what private credit is too. You're just le levering up the equity or the credit risk premium to get something. This is why private equity on paper should do as well as if not meaningfully better than public equity because it's private. So you get a little liquidity premium but more importantly you lever it up. >> Well, let's just stop there. >> You used to get a little liquidity premium or discount. You used to get it at a discount. used to buy the private companies at a discount and now they're actually overpaying and they'll pay more than what's in the public market because of the volatility laundering. >> Do you agree with that statement? >> I do agree with that statement. I should have been more careful in the way that I worded it, but I agree with that statement because you don't have to pay the public market valuation for something that doesn't trade as much. So, you get it on a little bit discount and I was calling that the ili liquidity premium. You get to earn that little gap when you're making the purchase. >> Yeah. Now it just and that's the part that just boggles my mind, right? Like I understand why it used to work like when Mitt Romney did it back in the 80s. They were buying companies at a discount. They'd buy something at five times earnings, lever it up, you know, fire a bunch of people and then hold it for five years and then, you know, sell it back out. And it made sense. They were in essence. >> Yeah. Look how well Toys R Us did. Jeffrey the Giraffe is the Jeff Bezos of toys today. Right. So you don't worry though. >> So here's I'm actually more worried about private equity than I am private credit. >> Okay. So explain to us why. >> And this is where it's less on the portfolio side. I So if you own private equity, you have to understand these evergreen structures and if they're selling into those or if they have any chance of an exit. It's really really important socially, society, on the policy front. We're watching talking to a guy that we work with and he's like, "One day you wake up and you realize you're the last private equity guy rolling up the last HVAC company in, you know, rural Arkansas or something." >> Yeah. >> What do we do when we've privatized all these companies? What do we do when my my own dad like with his aiology practice basically is like selling it? He can't find anybody to take it over for him. It's not a great business. It's not a terrible business. It earns a decent margin and okay return. It's an attractive thing, but it's more attractive for a private equity firm to go in and say instead of finding the the person like you who's 30 years old and wants to take this over someday, how about you just sell it to us and give us the money and now we'll be okay. We could manage this. We can lever this up and squeeze some stuff out of it. I think this is part of where smalltown America, main streets or whatever, this is why they all look the same. This is when I when I drove we drove my wife and I from LA, you know, out to Joshua Tree for a vacation some months ago and you're passing these shopping malls and you're just looking and you're going, "This is the same thing we have in northeastern Pennsylvania." >> Here I am in the BBS of LA and it is identical. The only difference is on that drive at least one maybe two sizzlers. Was very impressed. Thought those were gone. Almost stopped. Didn't but thought about it. >> I don't believe you. I don't believe you. There's there's at least one if not two sizzlers between LA and Josh Street. >> I don't believe you didn't stop, buddy. You can tell us you didn't stop, but we all know you stopped at the sizzling. >> Still got on my shirt. >> Yeah. So I I think private equity represents a whole other existential risk that we are just basically turning this over into these entities who will volatility launder who will show them. I don't know if they're going to be able to earn the returns that they used to by levering up that equity risk premium with the kinds of stuff that then are now stuck adding to. I think that's another one that's the five and 10ear forward risk because I also think about the Mitt Romney. Well, now you got Mitt Romney's equivalent of kids running these businesses. They don't have the same ladder in front of them that Mitt Romneyy's generation had in front of them to do this business, but they are there in these institutions that are now expected to put up these numbers going forward. That is a scary ask of the American population to say, keep building and making companies that you can sell into private equity. Then private equity can turn around and flip on the public. That's >> they'll just put them up in the in the cage above the car. Um the clients, that's what they'll do. Uh >> it's brutal. >> You're very good that you don't laugh. You don't say anything. You just kind of smile at my joke, my political joke, and don't piss off that side of your clients. Okay. Um >> bail of religions, man. You can't go out there and sell. >> That's right. Matt, you are just an exquisite interviewer. And before we start talking about your personal life and all the things that we'll have the rest of everyone hitting the non-market people will stick around, but all the market people will hit stop. Let's let's finish off with a question about the markets. If you were doing this interview, what would have you asked yourself that I missed >> besides what is the meaning of life or something? >> No markets. I want a market one. We're going to get to the meaning of life shortly. >> Oh, Christ. Good. Good. I'll uh give me all the names. Um >> so, so like what's on your mind that you would you kind of worry about or or that you feel like we should have discussed from a markets perspective? >> This is the the Kevin the Kevin Weir question. Paint me the picture of a bullish outcome for this year. I want all these IPOs. I want all the private credit fears. I want all the political stuff where the government whether or not we have the blue wave or not, what's the outcome? What's it look like where markets put up 10 or 20% this year and next year? I want the no recession bullcase like you are the Republican who just came back from the Birkshire meeting and you're subscribing to to SpaceX. What's the valid version of that argument in your head? >> Well, I'm I'm asking you, so you have to give it to me. I'll give it to you, but I want to hear yours too on this one because I think everyone is so bearish right now and we see this on excess returns in our comments. We put anything out that's remotely positive and the commenters just jump down our throats. They lose. I'm actually surprised about that because I see a very different uh and it just shows you the maybe you're skewing by who's listening to your show because to me it feels like when you talk to civilians people >> my clients are optimistic. Yeah. It's the podcast listeners who are not. And it's jarring how wide that spread is right now. >> Right. I I can give you I'll let you go first but then I'll give you mine and we'll see how we differ. like have you made you're saying make me make like give me the bull argument and and how it plays out is in essence what you're asking >> because I think the bare case is pretty easy to make because we can point out all the categories that are faltering or problematic or scary right now and I have no problem laundering out that list of dirty shirts. >> Okay. But but on the other side of thing, I think there is a pervasive and we can't understate this enough and maybe I'm just spending too much time with Ben Hunt, but there is a pervasive positive narrative from the companies have all learned the playbook on how to job own not just earnings, which is the old game. >> 80% of companies beating earnings and you learn how to set that bar and make sure that you're positive outside of an economic contraction. You got to make sure you beat and then even when you go into one, you got to reset. So you make sure you're beating. I think we have changed the way that CEOs and executives communicate what those corporations do. I think the public has caught on to when we invest, this is the way that we should think. And I think we can defy we can defy reality for probably a more extended period than people give it credit for. Back to WY Coyote again. Yeah. >> I genuinely believe the narrative of not looking down could make us defy gravity for longer than people expect. And that's where I don't think you can just go all the cash or go hide out and do something else. You have to be open to this as a some percentage on the table. Okay. Uh if I was forced to come up with the bull argument, I would go back to my belief about fiscal deficits create private sector credits. And I would look at the fact that we have this situation where love them or hate them, Trump has forced the rest of the world to start spending. And so if you look as an aggregate of the fiscal deficits that we are experiencing, they're monstrous. And you can that's scary in terms of inflation and eventually we're going to run out of capital. But until you get to that moment where you're actually gonna get people in and the other problem that is about that situation is what if we have financial repression l Russell Napier like what if they just say no we're just going to leave we're going to do YCC and YCC then all of a sudden you have this uh kind of scarce ability to take that money and put it somewhere and so they're going to chase equity. So to me that would be the crux of my argument is that the fiscal deficits are going to continue and as long as the fiscal deficits are going to continue then the private sector's credit is like that's the private sector's credit and the earnings are going to keep going up and I'm you know a little mad at myself in terms of missing this or not missing it but getting too nervous about it. I keep believing Trump when he says he's going to balance the budget or, you know, or or pull it back in or do the Doge and it just, you know, here we are and we're still running a 6 and a half% deficit or whatever it is. So, that's mine. Okay, listen. Let's get into some fun stuff now. Um, so for all the non people that are just want markets, you can tune out. Thanks for tuning in. You have got one of the most interesting backgrounds I have ever heard of someone in the finance industry. Uh why don't you tell us how you a little bit about your journey like where did you grew up? You already alluded to the fact that you didn't sit at the you know table talking about stocks and bonds and that you grew up in a very different household. Tell us where you grew up and uh how you ended up here. >> So you're familiar with the television show The Office? >> Yes. >> So Scranton, Pennsylvania is right up the street from where I grew up. I grew up in Wilsberry area about Yeah. That's our sister city right there. city is a generous term, but for two towns on the river valley. And as I like to remind people who have no idea about this, so Scranton was really, really important. And this does tie back to The Office because basically The Office and Kingpin. You know the movie Kingpin? >> Yeah. The bowling one with Woody Harelson, right? >> Remember when his life falls apart and he's the crazy landlord lady? >> Sorry. Yeah. Yeah. >> That's okay. When his life This is a common theme of my area. The office helped a little bit with this, but the place I grew up, Kingpin, when his life falls apart, he moves back to Scranton. The lady with no teeth on the hill is pretty accurate. So, Scranton a long, long time ago is the home of the first transcontinental railroad. >> When the country was built, the railway started out of Scranton and runs across the entire country. the whole highway system infrastructure for the northeast comes through basically like Scranton and then the Harrisburg area, all the trucking companies that were built up down there. And what you basically had was Scranton was where the rails ran out of. It's called the electric city because that's where all the coal came from the the Wolsberry area. We were called the diamond city. They were the electric city. And we got all basically the coal and the steel from the Allentown and the Bethlehem an hour and a half down. that's where my mom is from. That would come up here, get financed, put on the rail cars, the West is built. And that works really, really well as a theme until basically World War II when all of a sudden the area that I would then grow up in, not until the 80s, but the area I would grow up in becomes one of the most recessed places. It traps multiple generations and it is just dark, dismal. This is the rust belt story, >> okay? And it's not just in the American South. Like this is this is what this was. >> Yeah. >> So I I say all that because I grew up in this place that's basically recessed even if I don't know what that word means where all the highways overlap. I'm two hours in two hours I'm in New York City proper. I'm in Philadelphia and we're just in this weird little recessed corner of the world and in a hotel. This is important because this is foundational. There's a hotel in downtown Wilsberry, no longer there. was called the Hotel Sterling. The hotel was abandoned as responsible teenagers. We never ever went into the abandoned part of the hotel and saw the giant marble staircase and the crackheads sleeping on it and whatever else. We never did that in case my mom is listening at this point. But in the first floor there was a coffee shop where bands would play. It's mostly like punk rock and metal and hardcore and folk and everything that was going on in the early 90s. And I remember going there with friends in the outside front in the hallway of this old hotel that had a presidential suite on the top four floor. President's not coming to my area often. Joe Biden is from Scranton and there is a road they renamed the Biden Expressway that I laugh at every time I drive fast now. But there's a reason even he left. But in that club, I learned in my nent teenage years that you can get on stage and you can get up there with your friends and you can make enough money to go out to Perkins or Denny's or whatever afterwards and girls might like you and you can have some fun and this is way better than what you can get on the sports team and this is way better than what you can get in the after school club and this is the coolest thing ever. So from my early teenage years on, I started playing music. I started putting bands together. I started traveling because we had access to all these places and we were a tour stop for all not the giant bands, but like all these punk rock and hardcore and interesting weird things that you and I have talked about in the past, too, >> right? >> Huge entrepreneurial learning lesson on basically how to hustle and make a buck when you're 16 years old and you don't want to be working construction over the summer, which I did it once. Wasn't wasn't fun. So, you're a rock and roll star in essence and for how long do you do that? >> So, I should add what the one other detail inside of that because this takes me all the way through college chasing this this dream and this ambition. Yeah. >> Is when I'm in high school, remember the scene in Back to the Future where he calls up, hey, it's your brother, your cousin Marvin, and he's like playing, you know, and his >> the Chuck Barry scene. >> Yeah. Yeah, for sure. Yeah, I know. >> I always think about it. It wasn't this glorious, but it was like that. So, one of the one of the band teachers that I know, him and a bunch of other the other like area band teachers and some professional musicians and other people, they all had this band that they played in as adults. And I I had gotten to be a pretty respectable guitar player and had a little bit of a reputation as like a 15-year-old as being pretty good. Yeah. >> And he knew me from school jazz band and stuff like that. And so, the guitar player in their band breaks his hand or something one weekend on his job. Yeah. >> And so this guy knows my family, knows my mom, and he's like to my mom, Marge, he's like, "Can I know this is a weird ask, we've got to play this, you know, this bar gig or something. I need a guitar player. Would you trust me to take your 15-year-old son for the night and he'll be paid well for it? I think he could do it. I think he'd have a good time. Would you trust me to do it?" So, I find myself in my teenage years also moonlighting with the next youngest guy in the band's like 25 or 30 years old. Again, they're all professionals. So, I spend probably at least a night a weekend, many of Thursday nights. I have funny stories about running into teachers and bars and stuff like that. Playing bars, weddings, and corporate events all over the tri-state area with all these professional musicians. >> Wow. >> Where I'm not allowed like I can't sit at the bar. Like everyone, they're like, "He can't come in here." and they're like this negotiation. He's he can't leave the stage or if he does, he has to go sit in the back room. So now I'm sitting in the back room in a corporate event and I'm reading the writer and I'm asking these questions as a sober 16-year-old now, you know, >> why why do we own the van in the LLC? Oh, you got to do that for liability. Why do I get this tax form for these gigs but not these gigs? You know, oh, this is how we keep the do offer back, >> right? I'm learning all this stuff, but I don't realize it has any value. It's just part of it. And I start taking all those lessons to my own bands and my own stuff so that we're in high school. It's like, and by the time I'm in college, it's like, oh, let's start a record label. We'll do that for distribution and we can funnel money through this entity to do this other thing. Oh, you know, I'm I'm in college and I'm interning at a recording studio. And the person gets an offer to go out on tour and it's, hey, you're actually a pretty put together 20-year-old. will you take over this and run this while you're still a college student while I'm gone for the next two years? >> Wow. >> And these are the things that start to happen. So, I keep having people, you're good at business, but I don't know what any of that means. I've told this story before. So, I'm in college working in recording studios, running a record label, touring, doing a bunch of stuff like that. And all of a sudden, what I don't realize is Napster has happened in the early 2000s, >> right? The personal computer has now upset the entire recording studio landscape. And I don't understand that the industry I'm in is getting disrupted. >> Okay. >> When when I talk about like the kids of Mitt Romney working in private equity that think this ladder is in front of them and they don't know yet that that ladder is not there, this is what I'm experiencing in the music industry at 22 to like 25, >> right? because all of a sudden the couple of contracts that I'm getting to record an album or doing something are like slimming and trickling because people are like, "Oh, I can do that part in my home studio and then go to the New York City studio to finish the project." And now nobody wants to come to greater New England where I'm operating out of. And I'm going, "This was a business five years ago. Why is this not a business anymore?" And I don't understand it. So I'm paying the bills by recording the 15th terrible rap demo in a row. And the guy had two lines. I've told this story before. I don't know if I've told you this story. >> No, I don't. I don't think I've heard it. >> All right. So, the first line the guy says, I'm like, there's a redeeming quality here. So, there's something he's on to. He basically explains that he has more hoes in the back than a firet truck. It makes sense. It's logical. It's funny. It's clever. I'm all in. I'm in on this guy. But then then he says something about I'm gonna shoot you in the calves like Cleveland and I'm having this moment where in my brain like that it's the the Louiswis Black thing where he's like I know where aneurisms come from. It's the time he's in line at Starbucks and somebody behind him says if it wasn't for that horse I never would have made it through college. And then he turns around to ask what? They're not there. And because that question can never be answered. He's going to die. So this guy says, "I'll shoot you in the Cavs like Cleveland." And I'm like, "So the Cleveland Cavaliers, I get it, but the Cavs on my leg and why am I being shot?" And like the job wasn't fun anymore. >> Yeah. >> The thing I loved all of a sudden was I I was just so distressed over the only way to pay my bills is to take care of stuff that I don't even know if this is art and this isn't fun. >> And I started talking to people. I was like, I think I have to get out of this. I have to do something totally different just to clear my head for a while. And people kept saying, "You should do business. You know business. You're running a business. You're doing this." And I'm going, "No, I'm not. I never took a business class or anything." And so I translate the business advice to go get a job in finance. And I apply for a job as a part-time teller in a bank. And this is in 2006. And I get that job and I'm terrible at it. I can't balance my drawer. I'm just confused. I last two weeks and they're like, "You seem like you know how to you talk to the business owner people when they come in. Come sit on this side." >> And I start doing the personal banking and the business accounts. I start getting involved in retirement plans. They're like, "You should be on the management track." And I'm going, "I don't want any of these people's lives. This is just a pause until I go back to music." And I realize though, I need insurance. I need blah blah blah. Like, I'm starting to try to be an adult. Yeah. And I'm looking around the office and there's one person who doesn't look like he hates his life. No offense to the many delightful people that I worked with. And I go, "If I'm going to do anything, maybe what that guy's doing. What's he do?" And they go, "He's a financial adviser." Like, I don't know what that is, but I'd like to learn because that's the only thing that looks like it might be fun here. And I become a financial adviser in basically 2007, just in time for the world to try to end. And there's a whole traumatic story inside of that. But I didn't care. And I thought I was going to leave or quit this whole thing until that happened. And I realized in that moment all these people who said they knew what was was going on and were teaching me and explaining me all that stuff. When you walk down an aisle in a Meil Lynch office and you see the guy who you've been told ever since you got there, that's what you aspire to. That guy makes more money than a professional athlete. That guy does this. That guy does that. And you walk by that corner office and he's got his head in his hands and he's crying. You go, "What just happened?" They go, "Well, he sold his uh his mother-in-law Fanny's and Freddy's and they got zeroed." And you go, "None of these guys making all this money know anything? I have a chance in this business." >> That That's where I came from. >> You're telling me there's a chance? That's what you were you were your favorite Dumb and Dumber moment there. >> You're telling me this? Yes. It was truly a Dumb and Dumber moment, but it was also the part where all of a sudden I cared and was interested in markets and what was going on because that took over that just took over all of the attention. And when I was because I was working in that business, it just made it all the more fascinating. I didn't have a lot of clients obviously at that point because I was brand new. And I just figured out a way to scrape and survive through that first leg of things and going, I want to figure this out. I want to understand this MMT stuff that people are talking about that's not being implemented and why are they not talking about it. Totally sucked me in. The nerd side of me took over and that started this journey. Uh I saw you know when you were I was reading your introduction you said that you write every day and I actually grabbed one of your quotes and you says writing every day forces me to collect the things that make me curious and then connect them. Talk to me about that. And uh are you lit you literally write every single day? Like like and do you publish every day? Like is that there's something going out every day or is that just for yourself? >> So number one, I do publish something every day. I don't necessarily write every day. I make a note about something six times a day. I'm sure you do the same thing. >> The pattern matching of things that don't otherwise make sense until you batch them out. This is why I'm a Macrourist subscriber. I like people who chase lots of shiny objects and go down lots of rabbit holes and then go, "Oh my god, did you realize how these two things are related? That's the ADHD part of my brain and I can't I can't shut it off." So post financial crisis, I am just in pure like learning fascination mode. And one of the things that happens, this is when podcasts are relatively new still. you had to download them on the computer, drag the file onto the iPod. That whole thing is going on and um you're you're absorbing as much as you can. That's when the financial blogosphere was on fire. So, you were finding all these people. You discover someone with niche expertise around this area. You go all the way in and I realized I was just consuming so much, but it was really hard to complete a thought. Sometimes >> somebody would start to ask you about something and you're like, And back to the performance thing that's inside of me, I know that that sucks. If you ask somebody about it and they just ramble on forever, which I've now proven by rambling on about the course, but >> if you just do that, if you can't complete a thought, what's it worth to anybody aside from your own internal ego stroke? So about about eight years ago now, I decided I wanted to make sure I had at least one complete thought a day. And the way that I did that was I at the time because I wasn't allowed to publish anything because of my job and the compliance restrictions and whatever. Yeah. >> I created this was influenced by you know uh Shane Parish, Farnum Street, that guy. >> Yeah. Yeah. >> So someday I will tell him this. He and I have never actually met. >> Is he a Canadian? One of those guys is a Canadian. >> I think he's Canadian, but then he ended up in the US because he worked for CSA or something like that, right? >> Yeah. I I always get Okay, go on. Sorry. >> Do you know what his first website was? The first iteration of Farnum Street? >> No. >> This This has always stuck with me. It was It was just It was five numbers and I don't remember what they were. It was just five numbers and that was the web address. And the five numbers that he picked, it was the zip code for Birkshshire Hathaway. Really? And so he deliberately made an unfindable website with this one little nugget of a clue of one of his personal interests. That's how he picked the URL. >> Okay? >> And he didn't expect anybody to find it. But Farnum Street is born out of this weird writing activity that he didn't expect anybody to find, but he wanted that accountability for himself to put it out there. >> So my idea was the same. I was like, I'll just steal that playbook. I want to have a complete thought. if I just put it in my phone or in a file on the computer, it doesn't feel like I put myself on the line. So, I committed to start making sure one post a day and at first I would write them in the morning and put them out that day, but I made a series of unfindable websites where I accumulated them over time of one complete thought a day >> and I would talk about whatever. And there's there was some finance stuff earlier on that was mixed in there, but there was a lot of pop culture or other things that I saw as tangentially related. So, if I want to relate pulp fiction to whatever Mark Zuckerberg policy just got announced at Facebook, there it was. But at least I completed the thought, >> right, >> in a few hundred words in many cases. And I've carried that through and that's turned into now cultish creative. And I'm I I'm whatever the AI tool I use to help me manage all this stuff with the the mail the mailing list account and whatever else every day it's an intimidating number comes back. It's congratulations on your 2,800 whatever streak. Well, I want to see that. Uh for a while when I was starting to write the macro tourist and I took it a little more seriously, I said to myself, I'm going to have to get better at it. I'm going to write every single day no matter what. I just forced my like the Beatles, you know, playing twice a day in in Hamburg. Like that was how I viewed it. And I just if I was like some days I'd be like, "What the hell am I going to write about today?" And it was >> doesn't matter morning pages style. You just got to sit down and let something start coming out. >> Get something out. Yeah. Um >> but the curiosity of the overlapping of interests like the networking of ideas. >> Yeah. >> I see that as one of the most valuable skills in the modern era and one of the most important things. I know you do it. Again, this is why I subscribe. This is why I've read you as long as I have because you will take all this disperate stuff and you're not going to force a connection, but you're going to play with a bunch of stuff and you're willing to be wrong over time, whether that's with a trade or a market call or just just a view on things. Ideas develop and if you have a written record that you can now go search and heaven forbid somebody shows you how to use some AI tools to look at some of this stuff now and go back, it's it's amazing. Listen, one of the reasons that I like you so much is your views on happiness and um just choosing, you know, to smile and uh you know, I always say when people say, you know, how's your day? I go, it's great day. I'm on the right side of the dirt. Um >> every day above ground is a good good day. >> Exactly. And I I'm going to quote you here. Happiness is something that you have to make for yourself. You can't just consume it or wait for it. It's about creatively engineering your own joy by reconnecting with what makes you curious and fulfilled. Talk to us a little bit about your um attitude towards happiness because I think it is something we should all aspire to. I think if anybody's ever been sad or depressed or life has kicked their teeth in for a while and I go back and forth on if I think you have to go through that, but I I do think there's a little bit of an inverse proportional relationship to how much stuff had to suck at some point for how much you can appreciate the small things. You know what's the quote the enjoy every sandwich? You know that quote? Oh, the Warren Zeon quote when he was on David Letterman and and David Letterman asked him, you know, like, "What did you learn?" He goes, "Well, I enjoy every sandwich all the more now." Right. >> I think there's there's really something to that. And I see that I see that in my professional work when I'm given advice and I I take this very seriously. I've I've seen some dark days. I've seen some rough stuff in my life. I've been I've been down about things and it just sucks. It sucks to stay there. And I've seen people who get stuck in that trap and who just stay there. And what happens is if you don't have some sense of your own curiosity, you can't climb out of that hole. And the world's not a boring place. I feel like I walled up a lot of stuff. So from 25 to 35 when I was trying to figure out the finance thing, I was singularly focused on trying to figure out this finance thing and make a little money and earn this chip on my shoulder back by what didn't work out in music. Oh, okay. >> And I was so in the hole that I didn't have the same because like leaving music and going into finance, I didn't have a bunch of friends that I was with doing the same thing from college on. All these relationships, all this other stuff fell apart. So, I felt really really isolated for that period of time. And it wasn't until I till I started writing online and sharing it, even though I was sharing it anonymously that I started to realize not just how rich my curiosity was and stuff that was going on in the world, be it new music, be it whatever, streaming and stuff like that helped that out a ton, but then taking the time to think about it, you start to go, "Oh, wait. This makes me happy." Then you start to talk to people. You start making friends. I started making friends again and hanging out with people and actually like I I was with a therapist in like my late 30s and and I'm telling her about all these problems and all these stresses and all this crap I'm going through in my life and she's like, "Matt, who are you talking to about this? This is an important question for me to ask. Who are you talking to about this?" And I looked at her and I went, "You. I am paying you to listen to me talk about this. What do you mean? What even kind of a question is that? Isn't this like your professional oath? She was like, "No, no, you actually have to share this stuff with other people. This is how relationships work. Give and get. It's not all transactional. You pay me for this." And I went out of that I literally went out of that session with this therapist and was like, "Okay, I guess I got to I got to talk to some people about what's going on in my life." And my relationships with a couple of friends went way deeper after that moment. >> Oh, that's nice. You are responsible for this. You have to choose. It is a conscious choice. The most important thing is the conscience choice to do things that'll make you happy. And I think the more important one is choosing curiosity, not just the end state. Because if you just choose satiation, like you could stare at your phone all day long and you know catch all the Pokemon on Pokemon Go or whatever makes you happy and that's that's a route to nowhere. Instead, what you got to do is find something that you're going to wake up and be like, "Huh, you know, I've been reading the Bible and re-watching The Wire. There's some weird stuff going on there." Speaking of which, I rewatched the entire Sopranos the other day. And I, you know, I always loved the show. I did not appreciate how good it was from the very start. Soprano comes out the gate, Sopranos comes out the gate really, really strong. And same. So, I'm actually thinking about that one might get bumped up to rewatch list. Wife and I are re-watching The Wire right now. We're into season three. I a forgot how strong out the G. So, I've been thinking about The Sopranos in particular and the contrast to Breaking Bad on this is just how good kind of how different the first seasons are, but just how freaking good they were strong. the ground. >> The wire is one that everyone tells me I have to watch and I try it and I try one or two episodes. I find it just like like I'm not a prude and it's not like swearing bothers me, but it's just literally just one fbomb after another and I'm like and and I got I know I have to stick with it and I'm kind of embarrassed. I've never watched The Wire. >> So, because you enjoyed The Sopranos, you have to see the next natural extension. I share this to you as a as a storytelling nerd because I know you'll love this part of it, too. The genius and the brilliance of The Wire is it's a lot like reading five back-to-back novels. >> Oh, okay. >> Like each season you got to approach like a novel. And the hardest part about it is you have to treat the city of Baltimore as the main character, not the actual people that you're being introduced to. >> It is wildly overwhelming to just dip in and out of that show. Because in season two, I think my wife said, in season 1, she was like, I think it took me four episodes to just figure out who everybody was. And in season two, she was like, I think this one took me seven. And this is the genius of David Simons and Ed Burns. >> Every season takes a different structural look at the city of Baltimore and something else that's gone on. >> So, in season one, we have the cops versus basically the gangs. >> Yeah. Yeah. >> And so you have the kids running the corners and you have the cops and you have this giant wiretapping where the show's theme comes from, the name, the wire on how they're going to get information on these these the drug trade in town. We get a deep focus. Season two, we find out where the drugs come from. It's all about the ports and it's all about the unions and really it's about the people who are the second generation in who saw the glory days who are now in the the troubling spot and how they're having to cut deals with the people who are ultimately importing drugs and other stuff into the city and how it destroys the generation below them. >> Okay. >> And then by the third season we're back into what happens when all the drug guys from the first thing start getting out of jail and now trying to take over their corners again and the police are worried about a re-election cycle. Fourth season you get the schools. Fifth season you get the newspaper and it is just a full deconstruction of Baltimore as the character as it evolves through. It's when I say it's genius, it's amazing. And on the rewatch, the Easter eggs are just it's like they'll talk about a character for three three episodes until he shows up. But just one comment in an episode here and there. >> By the way, >> that's the same way with um Sopranos. When you watch it again, you'll be like, "Oh my god, I like I didn't miss that. You didn't even see this the first time. I I love that stuff. >> So, let's get to um the part where I ask you some questions in terms of uh some fun kind of personal things. I'm going to start with the speed round. >> Speed them up. Let's do it. >> Okay. Speed round. Here we go. Speed round for Matt. Number one, Duran Duran's Girl on Film. Girls on Film. An underrated or overrated 1980s hit. Oh, it is a I'm going to say it's fairly rated, but it by by standards of how many people know this and beyond hungry like the wolf and forget their I think they did an unplugged. I think they did a bad unplugged for some reason. But by all means, Duran Duran deserves way more respect than they get in the modern era. We should celebrate them. >> Your the best musical instrument. >> What on what scale? >> You just tell me. You pick it. >> The best question. the best musical I mean the best musical instrument is probably the piano because you can do everything. It's a string instrument masquerading as a percussion instrument where you can literally play the entire musical register. It's by far the most versatile of instruments. It's got the problem of you can't take it everywhere with you. So I'd put guitar in a near second place because similarly you can do most of it with transportability. But uh the piano has to take the cake on being the most important. >> Do you play the piano? You mentioned the guitar. Do you play the piano as well? >> I so I putts around. We grew up in a house with a lot of instruments scattered about. I can putts around with everything. I am not a piano player by any extent of the the words, but you know, my my go-to soundcheck song like in bands when they'd be like, "Can you go over and sound check the keyboard? I'd play uh there was the Beck song, the the song off Olay." No, there's one with the there's iconic Roads riff at the beginning. >> Oh, okay. >> I had a handful of licks that I had and that was one of them. I was always kind of amazed at like Paul McCartney being able to play all the instruments. Like he supposedly dubbed in for Ringo when he wasn't there. He played guitar, he played bass, he played piano, all these things. Are you similar? Can you play everything? >> I can mess around with everything. I can't mess around with read instruments or so basically like saxopones, like trumpets. I can't do that stuff because I never learned the the amisher for how to do it. >> But in my house, I played guitar. We had bands. We would rehearse in the basement. we would play. So there was always a guitar and a bass and my brother played drums. So there was a drum set down there and we'd keep we had a piano in the living room and a piano a keyboard downstairs a lot of the time. And you're bored. It's the pre- internet era. It's Saturday afternoon. You don't have school. You have a gig at night. You have nothing else to do. You go down into the refer to it as like the shed call practicing. Like you go in the woodshed, you pick something up. You're bored with your instrument. So you go, I'm going to tinker with this. and you have a weird understanding from the other way you approach it on a main instrument and you just play around and see what you can do. >> This is a little >> and that's very normal very normal for I think people with access. >> Yeah. Here's a little weird tangent but I I was watching Rick Bat the other day and he was talking about how in essence anyone can record like at levels that used to be require like million-doll studios. is is in some ways the world flattened for musicians. >> Yeah, that's that's the story of me not understanding macro disruption >> in my own life, which I think about this way too much now. But that was what I experienced was the beginning of that in the early 2000s with the advent of the personal computer and then forget it when GarageBand came on the scene with when Apple introduced that. That was the beginning of the entire demo process coming onto a consumerfriendly platform where all you have to do is press play. And there was a bunch of presets where even if you were recording into your crappy laptop mic, >> yeah, >> it would do two really weird pieces of music technology trivia that are worth mentioning. Do you have a Bose Have you ever had a Bose sound system or whatever? >> Like No, I've had the earphones had Yeah. Okay. >> Anything with Bose on it. This is the genius of Bose. They figured this out. I don't know, 30, 40 years ago, they basically figured out how to take a little crappy speaker and trick your ears into an entire frequency range that's not there. >> Oh, really? >> So Bose is just a mathematical trick, probably forier analysis or some weird thing that I don't understand because I was never good at math. >> They basically are tricking your ears into hearing a fuller frequency spectrum than is actually there >> and it's a genius move. Same thing with um you know autotune. You know what autotune is like share and all that stuff? Tea Pane. I know you're a big Tpane fan, I'm sure. Um, do you know what autotune was originally designed to do? >> No. No idea. >> Natural gas. It was designed for fracking. >> Come on. Antas, I think was the company who ended up taking it. So, what it was is you would send these shock waves down into the ground and do like the mapping of the ground, but it was all about frequencies and vibrations and then correcting for them. And some brilliant person realizes in early ProTools that we can make a plugin, that's what they were called, a plugin in the box in the computer where we can take this technology for finding and matching pitches and we can just kind of gently nudge them up or down without manipulating the the quality of the voice itself, >> right? >> Low coder style. We could tune this thing in. Came from the fracking industry. >> Does um, by the way, you will understand this. I don't know how autotune works. Does it take a scale and then just put the whatever the closest note is that you're singing and and move it to that thing or or do you actually put a melody over the over the the the points in the song? >> So, I'll generically explain a point that'll oversimplify it. So, don't confuse uh a vocoder with autotune. So, a vocoder, think like a melodica, like the thing you you um you have a keyboard >> like a melodica. Uh, Roger Troutman from Zap, like all that stuff where you hear like the voice through the keyboard. Peter Frampton on Peter Frampton comes alive doing the >> big new documentary coming out. >> I'm sure that's going to be interesting. Um, interesting guy. I mean, giant pseudo live album, whatever. The the idea with the vocoder is I can play the notes, I can play the scale, and it'll just manipulate my voice through the microphone, through the device to then manipulate them to whatever I'm playing on the keyboard or whatever. >> Right? >> The vocoder is close to what autotune is doing, which you might say, I'm singing a song in the key of C. >> Yeah. >> And now it's going to recognize that scale on the harmonic spectrum that's there, and it's going to notice, h when you said that E, it was a little bit flat for a major third. We're going to just nudge that up ever so slightly and correct there. >> And you can manipulate the in between area. That's where like T pay does all that crazy stuff. That's how they're doing it. >> Speaking of using the tool, >> um like uh so there's like their half steps, right? Usually a guitar is at a half step. How about that crazy French Canadian band that's playing the guitar that's got more that got quarter steps. >> So this is >> What's the name? What's the name of them, by the way? I can't remember. Ober. Oh, it's Ober. >> What's the crazy video with the >> Yeah. >> Yeah. It's pretty wild. The visual representation there. Yeah. Get the name because >> Yeah. Everyone's gonna need to know because if you want maybe it's not Ober. Uh, anyways, you tell us about that while I'm looking this up. >> So, we arbitrarily took the musical world and said, "Here's how we divide up the notes." That's an arbitrary measurement. It's just like taking a ruler and saying we're going to make 12 inches or whatever your fancy equivalent is you non-metric person you or you metric person non-metric bastards. So the scale is basically arbitrary and we have a long history of Indian music and multicultural music around the world that takes advantage of uh not just half steps but quarter steps and more micro divisions of like an octave is fixed. >> Yeah. >> There's there's C and then there's C. Right? >> You can divide that up into as many steps as you want. >> Closest thing like you have in American pop music or in jazz. You see the guy with the upright bass. The upright bass or an unfriended instrument that has all those notes because the octave is still there. >> You can divide it up into all sorts of different ways. >> Our ears aren't designed to hear melody that way. So that's where it feels a little disorienting or off when people hear stuff it that way the first time. I think that's what's going on with this band with these. >> It's called an angene de and I think it means heart attack or something like that. >> Yeah. Well, and they are a visual heart attack when you see >> Anyways, folks, go have a look at that the fast day stuff. Okay, let's get back to the speed round because I'm I'm doing um your favorite dark comedy. >> Oh, my favorite dark comedy. I mean, oh, I know I'm gonna I'm going with Heathers. I'm going with Heathers. >> Oh, deep cut. Deep cut. I like it. Best Canadian band. Oh. Oh, this is hard. I'm split on this one. I'm not gonna say not gonna say the the obvious one. And I'm gonna go with Propagandi and The Weaker Thans. >> Oh, nice. Guy after. >> Like the Weerans. >> I love the Weaker Thans. Unbelievable band that's underrated. And they're from my hometown. >> Even Even better. A Plea from a Cat Named Virtue is one of those songs that every now and a bad day got to hear. >> You know what's really cool about that? Like Frank Turner this, you know. >> Oh, love Frank Turner. >> Yeah, Frank Turner. He thinks that like he's obsessed with the weaker than he's >> one of the great modern acts. They are >> Amen. >> Okay. Um, what part of Idiocracy that has come true has surprised you the most? >> I don't think I'm surprised by anything in that movie. I think about that movie and how much I need to rewatch it on possibly a daily basis right now, if not a weekly basis. The amount of times I've cited it, the amount of times I've appealed to the genius of Mike Judge and said he's he's our unforeseen like messiah of culture. >> Yeah, it really is awesome. And you know, President Kamacho and he's a a wrestler and now we got the UFC fight. Like it's just it's like it's happening all the time. >> We are living in idiocracy. Copy over. >> It is just awesome. And you know what's funny about that movie? So I I you know have these pals. I sit on this desk and I I come in. I'm new to the group and I tell them about this great movie that they got to watch, right? Because they nobody had watched and I come back like a week, you know, after the weekend and I say, "Who right, who watched it?" And like literally like four of them had watched it. Three of them had tapped out, had not made it past 20 minutes, wondered what the hell I was, you know, who the hell this guy was recommending this terrible movie. The fourth guy went out and bought the DVD cuz he loved it so much. And I was like, "That's my boy. That's >> that's how you know who your people are. It is one of those movies that first watch I was like this is fine. It's fine. That was my my initial reaction when that movie came out was this movie is fine. And then it haunted me and I forget the first time that I was going this is very Idiocracyesque and I rewatched it and I went this is a little disturbing. Are you a Neil Postman fan? Have you read Neil Postman stuff? >> Neil Postman wrote Amusing Ourselves to Death and Technopoly. Those are the must-read Neil Postman books from from the 80s. He basically predicts he's talking about TV taking over >> and how radio to TV is rewiring our brains and what's going to happen next. He basically predicts social media in the mid 80s. >> Wow. Okay. >> And that's one of those things that it ages worse with time because it keeps being more right. And I feel the same way about idiocracy. It's a little too precient for me. >> Oh, that's funny. Okay. Um, Conan or Letterman? Oh, this is a hard one. So Conan's my generations, Letterman's my dad's. I grew up watching Letterman. The the top 10 lists, all that stuff is near and dear to my heart, but the sheer shenanigans of Conan of that team are way too much of my sense of humor is a blend of those two men. >> Okay. Um, if you could have written comedy for any sitcom, what would it have been? >> So, actually written or just been in the writer's room? Give me both. >> Okay. Okay. Uh, if I could have I could have only hung in the writer room because I would have loved to been there at the beginning of the Simpsons. >> Oh, yeah. >> Like when Conan was there. >> Conan. Yeah. >> Smiggle. All like that like crossover from the SNL people who ended that Simpsons early stage. I think I I would like to be there. If I could be in the writer room only because it's just too close. Any Kevin Smith movie. >> Oh, okay. Yeah. >> Um, tri-state area. That's my every time Smoddcast, one of my favorite podcasts of all time for the reason I've got the book of the transcripts back there because it sounds like my friends and I talking to each other in the most surreal of ways. >> Okay, got it. Um, what would you like everyone that's listening to this take away from your life experience? Sappy one to finish it here. >> Okay. Yeah. Be curious about something. Don't be boring. Don't be miserable. It's a choice to show up in the world and be a kagon. So, just go have fun. Life is so much fun. There's so many things that are just enjoying en enjoyable and silly and goofy and right down to, you know, we're sitting in the local bar, restaurant, whatever the other night and we we're all excited because there's an AI commercial for some company on and it's Idris Elba in it and we're at the bar and we're like Strigger Bell. Life is fun. >> It doesn't take much. All that matters is the people you spend time with. It was part of why it was so much fun to spend time with you today. This is the highlight of my week. >> I am I feel exactly the same way and I'm sure everyone else does and I just want to thank you for spending time with us. Why don't you tell people about your firm, your podcast, give us the whole spiel, where they can find more of uh Matt Ziggler, Dirk Diggler extraordinaire. >> So if you want the full boogie nice treatment, >> yeah, >> I'm not going to give anybody the boogie. So the um for Sunpoint and what's important to know about Sunpoint is we work with everybody from institutional clients and family offices all the way down to people who are just starting off or uh that might mean you need investment consulting services. That might mean you just need a financial planner. And we work with a lot of people especially in the industry and around the industry who go, "Yeah, I'm really good on the investment side. I'm solid with this, but uh I I haven't really finished that estate plan. a little worried about this thing or I'm gonna take this job with this new family office, but we got to set up these entities in like the Cayman Islands. How do I navigate the operating agreement and the ownership agreements and stuff like that? And we do a lot of that contract work, too. And it dovtales in everything that that we do. And that's part of the reason I'm at this firm, the reason I'm I've joined this firm and I'm interested in running strategy there is because we get to see the whole scope. So, if you need financial help on any of this stuff, we have context. We put it there. The reason the excess returns network and stuff like this is so important to me is because I use stuff like this for all my clients. I make these connections. It's valuable. So that's that side of the house. I'm doing a lot of work with Ben Hunt and the epsilon theory guys over at Panoptica. Percion is the entity. Panoptica is our public facing thing. We're doing this really cool series right now called epsilon theory unplugged. Uh Ben wrote the first note. Brent Donnelly wrote the last note. I know he's a fan. Somebody you've had on before. Yep. >> I've got Rusty doing a note coming out next. Adam Butler, have you done Adam Butler on this? >> No, I haven't had Adam Butler. >> Should get Adam Butler of Resolve on this. Grant Williams is in there. Dave Nodding's in there. It's like a murderous row of creative people and we talk and this chat and we're writing stuff and making things. The cool thing about that one, see the world through stories. All that's on there. I'm writing about stuff usually every week or every other week just saying how you can sort of put some of this stuff into practice. Somebody in my shoes. And last but not least, Cultage Creative. That's personal brand. That's me making wacky connections. I literally was thinking about I'm reading this. I'm going to get it wrong. It's the guy who did the graphic novel of the Flintstones. That's really this like meta commentary on capitalism. He re he rewrote the entire Bible. When I tell you it's the funniest thing I've read in a long time, I am having the best of times reading the Bible every night before bed. Tell my wife it's like it's like going upstairs. got to read the Bible. Having my Bible study, but I'm I'm watching that and I'm watching The Wire and I'm thinking all these overlaps and I'm going, "Oh, this is there's a post or an essay coming out of this." That all happens at Cultish Creative and then my other many podcasts just press record, which you are coming on at some point. >> I will for sure. >> I do blind introductions with people that I think should meet that otherwise would not end up on a podcast and I just decide to start recording them and that's literally my favorite thing I do. >> Oh, that's awesome. Listen, Matt, I've enjoyed this so much. Uh, it's great getting to know you a little bit better. Everyone, please go support Matt. Go find uh all of his different endeavors. And remember, just go have fun. >> Go have fun. Thanks, Kevin. >> Thanks,
THE WILE E. COYOTE MOMENT (Guest: Matt Zeigler)
Summary
Transcript
Hit it. It's Friday, June 5th, 2026, episode 292. I'm Kevin Mure. This week, Patrick has buggered off and left me alone. But have no fear, I've replaced him with someone better. It's my great pleasure to welcome to the show Matt Ziggler. Matt helps clients transform complex situations into actionable plans as managing director at Sunpoint Investments, where he oversees strategy and client communications for over $4 billion in assets. You can find him online via the Excess Return podcast, as a senior editor at Panop Panoptica. Yeah, I guess that's how I say it. In collaboration with Epsilon Theory, and via his cultish creative brand where he has written daily for eight years and hosts his blind introduction podcast, Just Press Record. Matt, thanks for coming on the show, buddy. >> Kevin, a long time coming. First time >> long time listener, first time caller. >> Very excited to be here. By the way, you were telling me, you know, that uh we were talking about how to pronounce your name and you told me, you know, Ziggler and then you said what what the kids told you in uh in elementary school. Was it like tell them >> you got to carry your traumas with you top of mind at all points. So when I actually there's two things with my name. >> The first is as dear Amanda told me in kindergarten, your name rhymes with jello jiggler. Thank you permanently in my head. And as Grandma Ziggler taught us all to say and carried down by my mom, no one can spell my last name >> because there's even there's a local apple cider brand or whatever that spells it like the wrong way. >> Everybody puts ZIE and that's wrong. So she taught us to say I before E except after Z. >> Okay. By the way, when you said the jello jiggler, all I could think about was Dirk Diggler. So that's you're the finance version of Dirk Diggler. That's how I'm going to think about you from now on. all boogie nights all the time as you know. Okay. So, listen, you are um just one of the my favorite guys to listen to in terms of all your podcasts and all your different creative things that you do and we always have so much fun when we chat offline. And I when we were writing it was when we were kind of organizing this, I said, you know, my worry is we're not going to talk enough about markets. So, what I'm going to do, >> my goal is to just train wreck this. I'm trying to bring down the quality of the market huddle. I Patrick's gonna come back and be like, "What were you even doing? This this wasn't even a finance show." >> Well, you got to tell people what Jack, your your your co-host of your podcast, said when when you said you were appearing on our show. >> Credit to Jack Forehand, the perennial roller of clips, as I introduce it constantly with him. Jack literally said, "Why do these macro shows invite you on when you just never talk about macro with them? You just derail them." He's like, "Is this your strategy for excess returns? you're just gonna destroy all these other brands with your nonsense and hope that we're the last one standing. And he's not wrong. He's not wrong. >> Okay. So, what we're going to do is we're gonna start with markets. We're gonna go straight into it. We're not going to We'll get to your terrific uh story of your life and everything else afterwards, but we're going to start with markets. This is just a fascinating time because I I don't know how you and your clients are dealing with it, but it feels like all that anyone cares about is AI. So, let's just let's just jump right into it. What are you thinking in terms of this? How do you make sure that that doesn't become the overwhel overwhelming focus of everyone? And like, how do you deal with the FOMO that people must be experiencing in terms of when they're seeing these things explode higher and they're not stuffed to the gills with SMH? Well, the problem the problem with it and forget just SMH, we have to broaden it out is no matter what you do, everything has just become a leveraged play on AI, right? You could very easily have, oh, I have my diversified portfolio of stocks and bonds and well, yeah, I own the Q's and I own my private credit who's financing the data centers and you look at this thing and it's all just a giant bet on one thing which is AI drives all growth in the world and everybody and God help you if you're it's going to take your job, too. So, so what do you do about that? Like how do you deal with in constructing portfolios telling, you know, explaining to clients what they should be thinking about? Um because it it see it it feels to me like it's extremely dangerous. And you highlighted the concentration risk. I just look at the S&P 500. What is it? The top 10 stocks are 40% of the index. That's crazy. >> 40% of the S&P in in 10 stocks. And that's basically driving it. And again, back to forget where you work. forget all the parts of your own life that are dependent on these areas. So with people, the conversation is always mapping the exposure across your entire situation. And and I'm not just talking about your portfolio. You actually have to map it across your life. If you work in an industry that can be disrupted, do you read Kaioo's stuff? Have you seen much of Kai's stuff? >> Kai's great. This is a hard plug for Kaiu at Sparkline Capital. >> I see him on your show. He he hosts every now and then. I do I did see him interview a few people. He Kai is excellent. He's done all this work on basically why value investing doesn't work anymore. How you basically have to re understand intangibles and their role in the process. And he basically looks at he just published this absolutely fascinating piece about how value as a factor still works so long as you break apart the disrupted industries from the industries who have been regularly immune for whatever reason. They have they have something. So like as an example, places that are surprising that AI is disrupting is the retail sector and there's all these weird so beyond the software stocks and the obvious ones that have just gotten blown to pieces. Interesting dispersion trade inside of that. But just in retail alone where all of a sudden it's are we going to sell more stuff online? Is this going to change supply supply chains and vendors and orders and just the way things are secured by the customer? That's really made a giant impact there. And what he's basically said is if we look inside, if we look subsectors at who's basically been blown up by AI is going to come eat your lunch versus AI hasn't really figured out how to eat your lunch yet, the value factor actually still works in this side of the house. >> Oh wow. I didn't realize that. >> Wild the parts of data. >> So inside of a bunch of these things, we're looking at people's life. We're looking at their portfolio. We're looking at that balance sheet and we're saying what parts of this are we overexposed and are we comfortable with that risk? And you could be comfortable with that risk because you've got a lot of years in front of you. You could be comfortable with that risk because you just have it inside of an index fund and we understand the balance of that and what you need it for in 5, 10, 20, 50 years, your grandkids, whatever the situation. And if you're not comfortable, then what do you lean on to do about? And one of the biggest things to lean on to not do about it is just go buy stuff that's not tech. If you have to have stock exposure, get non- tech exposure. If you have to have fixed income exposure, get away from private credit or stuff that's levered up to the tech industry and lending in those places. And that's that's a herculean effort right now. >> And so how do you do it? like is it by individual stocks and like moving away from indexes or do you the thematic sector index uh ETFs like walk us through kind of what you know if I came to you and said you know I'm looking to invest this little nest egg that after I selling market huddle for you know hund00 million to Spotify I need you to take care of my money and I'm really worried about being overexposed to AI what would what would that portfolio look like? Yeah. So what that portfolio starts to look like is basically again we want to wait away from what what we're concerned with or what we have too much of. So some of the conversations are what are other places if you're heavily growth andoriented you're probably underweight a lot of inflationary assets. Likewise you talk to some of the I'm saying this lovingly some of the crazy trader types who are up to their ears in uranium and oil and stuff like this. >> We do financial planning. >> I feel seen. I feel seen. A big part of what we do, like we work with some some asset managers. We work with some traders and other people on the planning side where we're not even doing their investment portfolio, but we're trying to make sure stuff is okay in their life around the parts that they have control of. And this is a regular conversation in both directions. The person who's been all in on growth and AI and is just up to their gills and if this doesn't work, they're screwed. the other person, >> you might fall find yourself in this camp who is just like beating themselves doing that what's like the monk who's like slapping the the spikes onto their back and they're like oil and gas miners uranium. >> I like the the the uh the thing I wrap around my leg and I tighten it up. Like that's the one I do because nobody sees that one. >> Like what's his name in Billions? Paul Giamati's character where he's the rubber bands. you're like, "Oh man, that guy exists. They didn't fictionalize that that guy is in a room with you and you don't know it." So for those people though, you have to find the counterweight. If you're all in on growth, we're going to talk about and depending like if you sell it for $100 million, we're probably looking at private opportunities and other things too where it's, hey Kevin, what's your inflationary asset like exposure? because we should probably talk about things like rail cars and energy and some of the other sectors, utilities that you're underweight that aren't historically correlated over market cycles with this giant tech investment. Likewise, on the other side, if you've got all the oil and all that stuff, it's let's get some exposure to just broad market beta. Let alone, even if you're not going to go out and buy the SMH or whatever else, let's get you some exposure so that you have some balance to what's actually here, which is businesses are going to innovate. They're going to figure out a way to turn their lights on tomorrow. Some businesses are going to get carried away and do reckless and stupid things. other ones are going to find ways to basically be self-defeist even though they're trying doing the right thing and we just want that exposure because the equity premium equity risk premium actually exists. I do believe this is a thing and I am willing to stake people should have some exposure to that asset class. >> You know what's hilarious? I actually made some questions like I was like okay I'm want to ask them and things like that and that was one of my questions. Does the equity risk premium still exist and is there any point of even thinking about that? So, you beat me to the question. Explain to people what the equity risk premium is. Explain why it hasn't worked yet and why you think it's so important. >> Stocks should return more than bonds. Bonds should return more than cash. And that's basically the idea that there's a risk premium inside of each. I could go into the way deeper boring conversation, but let's just put it on there. the way that I will regularly explain it to my mom or somebody who basically we never had a conversation at my table about finances that wasn't oh crap how are we going to afford this or pay for this or something that felt like stress >> okay >> so there was no stock trading conversation at the table that was reserved for somebody else nobody explained it to me sometimes on NPR in the car they would say something and it would seep into my brain but there was something called the DAO and it sounded scary >> so when I'm explaining it to somebody like that it's like, you know, McDonald's, you know, people work there. You know how the lights got to get turned on and turned off at the beginning of the end of the day? They have to figure out how much to charge for that Big Mac and those chicken McNuggets and those golden French fries and even the salt and the oil and the fry later to make sure there's enough money tomorrow that they can just turn the lights on again, right? and that company in having to constantly make that decision over and over and over again, that thing that keeps them in business is this idea called the equity risk premium. And it basically says the risk of making sure we can turn the lights on tomorrow. If we succeed, we stay just barely one step ahead of inflation, just barely one step ahead of what it costs to hire people, and just barely in business where our real estate and everything gets taken care of and we earn the right to fight another day. And that's very different than if I'm lending somebody money to go do something and I'm locking in the rate and I'm fixing it. Sure, I got to think if they're going to pay me back or whatever else, but that's way different than taking this entrepreneurial bet that I'm going to be able to turn the lights on tomorrow. >> So, the person who turns the lights on tomorrow, they get to earn a little bit more money. The person who just gives out the loan, they get to earn a little bit less. If you put it in the coffee can in the backyard, you know, you're probably going to be poor unless the whole world melts down and then you're going to wake up in the middle of an apocalypse one day and who really cares? That's no fun. >> Okay. So, the equity risk premium is in essence the the difference in the earnings yield of the stock market versus the 10-year or whatever fixed income instrument you want to use. Yeah. And one of the problems with it is that when you look at the returns, the equity risk premium and and like just as an example, in 2020, the 10-year bond was what 1%. And I think the earnings yield on the S&P 500 was five or six. it was it was up there. So the equity right so the equity risk premium was four to 5% meaning that that was the extra um return that you should expect to own stocks over bonds and at that point made sense because nobody wanted to buy stocks everyone wanted to buy bonds because although we all forget this people were really bearish right and nowadays it's flipped we have this situation where the earnings yield is four or something like that I can't remember the exact number and the or three and a half or something and the and the 10ear is 4 and a half so it's actually negative. Um but one of the problems is that when you look at the earnings the equity risk premium and then you plot the next year's returns there's almost no relationship right so this is what the push back that you get from everyone is like why are you talking about you know bonds going down so therefore stocks going down it doesn't work I take it you probably have a different view about that why don't you explain to people why it does work and at what time frame it works >> you know do you remember the things you're not supposed to talk about at parties or at social gatherings ings and events equity risk premium. We're going to get back to it. Definitely don't talk about that. And but there's a reason why. So you're not you're not supposed to talk about religion. You're not supposed to talk about politics. That's the general rule. >> Okay? >> When we talk about stocks or we talk about bonds, we talk about any investing strategy. As I love to remind people, they're religions. Like they're crazy people. Religions don't often cross. The kids at the local Methodist church don't usually wander down to the synagogue and join. Once in a while it's gonna happen. Little Johnny's bar mitzvah, everybody gets together. Yeah. >> You know, Marky's confirmation, everybody gets together. But we don't mix religions. And when we start to talk about, well, surely equity investors are going to go, look at the yield on bonds right now. Let's sell off our stock exposure and go buy bonds. Unless there's a bar mitzvah, those Christian kids aren't going to hang out with the Jewish kids at the synagogue. It's not going to happen. So most of the time, these religions never mix and never cross. And we talk about them in this academic fishbowl like this is the way we should do it. Like we're all of a sudden we're rational actors again. I'm sorry, that's not the way it works. The person who sets up shop as a lone shark isn't really worried about going to become an equity investor. And the equity investor, the entrepreneur, isn't worried about becoming a lone shark. this stuff doesn't cross except for in rare occasions >> right >> now. When it does, that's when all of a sudden a there's opportunity and something is going on. But that's for people like like us, like me, like you, people who are allocators or willing to zoom back and say when stuff gets really weird, there's an opportunity. >> Yeah. >> But most of the time, don't expect anybody to arbitrage this for you because this is the separation of churches. They all believe different things, >> right? And and to be fair, like if you think about the big money that will make those changes, they operate on such a slow time scale, right? It's the endowments, it's the pension funds, and like, you know, I've had experience with these guys, and they take forever to make a decision, and then when they make a decision, it goes on for, you know, months and quarters and years. But it it it is a slowmoving process. But anyways to the back to the point about the equity risk premium although it doesn't work over the next year in terms of predicting the uh the returns of stocks when you take it over the next five or 10 years it becomes very clear what so what does it say now? Well, so what's really important about this is when we start to look at over multi-year periods, this gets important for those big institutions, especially the ones who do asset liability matching in any way, shape, or form because they're trying to pre-plan future outflows, expenses, other things that they have to get in line for to say, I just need this endowment distribution to be safe in five years. I just mean need this defined benefit pension plan to have distributions for these right retirees and this demographic pool in years five through seven here and here's how I can lock this in. So what's happening right now is you have the ability in a lot of these giant entities where they can look forward and say I can asset liability match with these bonds better than I can do that with these equities >> right >> that does move the needle and it can happen over a period of time it's very interesting to look at the perceived equity risk premium now trading at a a high valuation relatively speaking in stocks we have a middle valuation relative to bonds and fixed income neutralized view on inflation and that does I mean, when we're talking to endowments or large institutions or people who are doing that asset liability matching exercise, they're going, I have a way to solve for three, five, and 10 years out right now, if I just lock in some rates, >> right? >> That's going to be money that's coming out of stocks. And that's part of a bigger flow story that Yeah. Everybody should be aware of. You have to solve it for yourself first, though, >> right? Fair enough. and and obviously you know one of the things that your theme is that you are tailoring portfolios to each individual and that is going to vary and there's no doubt about that but in terms of when we're just talking about the macro environment and different views that you might have what do you feel about that um earning uh sorry that stock overvaluation and what has caused it you know like AI is one of them but that's just that feels like just the the the the the the kind of the party of the day. The reality is that we've been going up ever since what 2020 in terms of what we were experiencing in terms of overvaluation. And all you have to do is look at like, you know, it's outdated, but look at the Warren Buffett indicator versus the GDP, right? We should have in 2020 it that should have been the top and yet here we are. We've exploded to absolute huge numbers. Does that worry you? Yeah, it's terrifying because it feels awful. It feels awful. The only solace that I take and I know you're a fan of the Ed Yardinis of the world and some of these people who track earnings expectations and then what actually gets delivered. The only good sign in in this whole thing is that we've been sitting at lofty valuations for basically since right after COVID. Yeah, we had the blip in 2022 when everything sucked and nothing was fun and everybody was miserable because stocks and bonds both went down at the same time and it was awful. But since then, we've basically seen a giant earnings recovery. We've seen a giant revenue recovery. We've seen a giant cash flow recovery on the equity side. So, when we just zoom out and we look at index level valuation at 20 times earnings on the S&P 500 or wherever right now, we look at that number and then we say, well, how have earnings done in the last one year, two years? how's forward expected going? And you go, we're treading water at a 20x multiple, >> right? >> It's hard to hate treading water if we're actually getting the growth that's delivered, >> right? >> So, this makes me sick to my stomach because that's a really high growth rate to keep putting up, but I like the idea that we've actually kept putting it up, >> right? >> So, we've grown into this earnings. Now the problem with that is the index constitution has also evolved over that fiveyear period and now a lot of that growth I forget what the stat is Cameron Dawson had it the other day it was like Micron and somebody else are basically all the earnings growth this year 50% of the earnings growth this year >> the surprise I think for this quarter or whatever at the very least it was all from those two >> so when all of a sudden you start breaking down that most of the earnings growth is coming from a very narrow sector that makes me feel like this is fragile and this goes back to that argument You're probably overexposed to AI. If you're an index investor or just a generic allocator of capital, you're probably already overexposed. So, what are you doing to lessen that exposure and trying to do it in profitable qualitydriven places that will still allow you to keep your equity risk on the table, but not chase that 20x multiple? Because we've all seen the nonJP Morgan guide to the markets presentation where it's like, here's the S&P 500, but let's net out that mag seven. Let's net out that top 10. Let's just look at where the Russell 2K is trading. Let's look at these other factors and say maybe it's not as expensive as we thought. And in some cases, the earnings are keeping up. That's always where you want to be as an equity investor. >> Okay, let's talk a little bit about that. The other day, I was watching uh another podcast. I won't say what it was, but these uh there's two very famous guys. There's one guy's on CNBC all the time and he started making fun of equal weight and saying like why would anyone want to ever be an equal weight? That is the stupidest thing I've ever heard. And I was like just shaking my head. And he and what was was kind of shocking to me was he wasn't aware of the like you know decades of research that show that equal weight actually beats um market cap weight and the reality is that the guest kept trying to tell them no this is a function of the last 10 15 years before that equal weight has crushed everything else and the only reason people don't do equal weight is because if you're a large institutional investor you can't do equal weight you're constrained by the fact that the you know you need to go market cap weight to get the liquidity. So first of question to you is do you agree that equal weight should outperform over the long run and is this just um uh a blip in time and what is driving that and should people be considering that as a way to diversify and to you know push back on all the concerns that you have in terms of the concentration risk. I I want to lever the very poetic term that I know is borrowed but applied here. I feel like he deserves credit. So Mike Green, everybody's favorite person next to Cliff Vases to have a argument with on Twitter. Mike Green has referred to again very poetic, can't stress this enough, the inshitification of the index. Yeah, >> you heard. Yeah. Okay. the the inshitification is when you and we have these these updated rules for fasttracking. S&P just shot down the stuff for the SpaceX inclusion last night. >> We'll talk about that. We'll talk about that. >> Crazy crazy seeing that break this morning when I woke up. But this idea of back to just generic stock exposure and I'll tie this to the equal weight. If you have an index that is comprised of large free float adjusted profitable companies, that's a pretty good bar. Like the the the S&P equal weight, that's a pretty good bar of companies that have now scrubbed out the problematic nonprofitable trash, the junky stuff that you'll find in your in your Russell 2Ks that you'll find in some of your other places. And because of just size and momentum, it's a pretty attractive set to start working from. Even if you were going to construct a 30 stock portfolio out of that, this is a great starting point of just what the S&P 500 is. That's why it's worked so well as a free float adjusted market cap benchmark that we all look at and talk about way way too much. Been in the business long enough to remember what everybody still talks about the Dow and that conversion and that education cycle because life is weird like that. We shouldn't forget it with equal weight. Equal weight and free float adjusted market cap weighted because I feel like we have to say the whole thing for the last month because all we talk about is AI IPO inclusion in these benchmarks. >> They just dovetail like market cap weighted leads then RSP leads or then you know whatever the equal weight ETF lives. >> So they they flip back and forth and they move in like three or five year cycles. You can do a lot by just rebalancing them on re relative strength if you wanted to. There are entire relative strength strategies. I think Dorsey Wright even may still run one that was literally which one is the leading horse in the race and then we just pile onto that until it works until it stops working and then we flip back to the other one. I have no problem with that as a structure for actually managing money or thinking about this in concept. And right now in particular when we know we have this giant overweight and we have this earnings risk and whatever else. If I can just retreat back into quality and still keep my equity exposure on because I believe in the equity risk premium of McDonald's pricing the chicken nugget right that's a good place to be. So I'm actually very optimistic about having an allocation to equal weight instead of market cap weighted. I think it's smart. You have to be aware when sectors get chunky or clunky inside of it. been leerary about it when you get into like that 20 or 30% financials or you get there's just too many companies doing the same thing that's a different type of concentration risk. >> Yeah. >> But you can very comfortably and you can go test this on your own kids. It's fun. Back tests. What do you want to take an equal weight index and blend it with a quality or a momentum or a pick your whatever your factor of choice is that makes you happy to see those stocks in it. Very complimentary. really helps smooth the ride over time and it keeps you away from the trash at the top and the low end. >> Okay. Um the other thing that is seems to no longer work that used to be a staple of uh portfolio construction is uh emerging markets or foreign markets where >> who are they? >> Yeah, >> we shut down the didn't we build a wall? Do we allow those funds into portfolios in this country? I know you're in Canada, but >> tell us what how you view those as a you know in terms of constructing a portfolio and is their day coming. >> My favorite this is going back. I learned a lot in the post financial crisis period in the Zerp era >> working with a bunch of defined benefit plan clients and and setting up because they changed the rules and the regulations in there and a lot of smaller companies were able to set these things up. And the problem was you're setting up these things that have a in many cases a 4% or a 5% growth hurdle and they were setting them up in this zerp world. And so you had to solve for how are you going to hit the 4% hurdle rate when treasuries are zero and that's what you're supposed to be using. So there was this giant opportunity to rewrite all these investment policy statements and go in and help people go here's how you solve for your hurdle rate in this new weird environment. >> Okay. So >> put me back on track with this. Where was the >> So emerging markets, foreign markets in terms of portfolio construction. >> So we're doing this. We're looking at earnings yields around the world and thinking about this. And I had it was a guy at Fidelity. I can't remember who it was, but it was a guy at Fidelity. We're talking through this and he says, "You know what's weird about Europe is half the index is this pre-rexit that whole weird state that they were in where you buy a truck in Switzerland and it's got to go through the bank in Germany and now the balance of payments was all screwed up and everything." He went, you know, if you just exclude all the financials in Europe, it's not a half bad index. It's like most of these companies are there to lose money. So if you just got rid of all of them, you actually have a very investable index. And that really rewired my brain on the the dash to whatever that was emerging markets in the year right after the GFC to that period of where you were looking at Europe in the 2014 15-ish era and saying, "Hey, if we just figure out what parts of these to include and which parts to exclude, you actually have some really valid businesses there." And I think right now today in 2026 when we look at emerging and we look at Europe and we look at developed international, you can go to Japan, you can go to these countries and you can find good businesses at decent prices with good growth profiles, >> right? >> And if you're trying to lessen US tech and you're having trouble doing that with equal weight or you're scared about going smaller cap because there there is a lot of junk and stuff that doesn't make sense or that's likely going to get disrupted by AI. I see no problem with having the international diversification on the table, but you probably are going to scrub that a little bit more than just the top level indices which don't always connect you to the story and the exposure you actually want. >> Do you have any ETFs that you could tell people to go have a look at or or do you think that they should be actually picking stocks and making portfolios? >> I think you can pick stocks and make portfolios or choose active managers. I think if you're going to pick either country or you know factor ETFs, you have to just look at how it relates back to the rest of your portfolio. I can't for regulatory purposes discuss the tick. >> Okay, fair enough. Understood. I didn't mean to put you on the spot. >> Yeah. Yeah. Okay. So, um maybe you could talk about countries you like the most or are there not like the most that intrigue you the most and think that offer the best opportunity. >> This is I'll just you know you this is why I read Rupert Mitchell. This is why I we read people who are like, "Do you know about this closed end fund in Austria or whatever?" Random stuff. That stuff is fascinating to me. I I think generically speaking, you want to have some awareness or exposure to Japan and whatever the heck they're going to do with this energy situation. Look wherever dollars are flowing. Same thing in Europe. There's a bunch in continental Europe where between Germany and the UK, they have to solve a bunch of these problems around energy and defense. And if governments are throwing money into situations, there's going to be some businesses who figure out how to not just turn their lights on the next day, but maybe make an extra buck on the side. >> Okay. >> Um I don't know if you're going to You can duck this one if you want, but what about your political situation in terms of in the States? It's a little more divisive than it has been in the past. Do you worry about that as a like a as a risk factor? Like do you think that that should do you think that geopolitics should go into anyone's um portfolio construction in any way? >> I think politics should not because politics are a religion. >> Okay. >> And I I say this this is the I love looking at people for the composite religion that they're made up of. It's really a fascinating thing because you don't see this in regular religion. somebody doesn't again back to the you don't cheat on the Methodist church with like a little synagogue on the side but you'll talk to the the hardcore Republican who went to the Birkshshire meeting who wants an allocation in SpaceX. They exist. You probably know six of them. >> Okay, let's talk about SpaceX then. Let's go all the way politics. Yeah, politics are religion, so you have to assess them. My role in my seat is not to judge anybody for their religion. I'm agnostic as the day is long with this stuff. I have to be aware if somebody's coming into the table with those beliefs and then try to decolor that view from their glasses of saying >> let's not make the decisions based on the politicians or the religions that we sign up for. policy on the other hand, >> okay, that's a better way of putting it because I would say that I'm very similar in that I always say I don't let politics get in the way of a trade. Like if I thought that, you know, XYZ politician, I hated the guy, but I thought it was going to result in the stocks going higher. I'd buy the stocks. I'm not going to sit there and like go I'm not going to buy the stocks because of that. Like they you have to go to where the trade's going. So anyways, going back to policy, do you worry about the American policy then being disruptive and uh a bigger risk factor in terms of owning the US market? >> Yeah. And I think we should redirect this global too where it's not only do I so the US policy has become a concentrated bet on growth in AI that this is going to solve all of our problems. >> Oh, I see. Okay. So that's a big weird risk where the government is now directing money in a policy direction towards investing in an industry that probably doesn't help us out of a lot of problems if we actually get the result that we're investing in. So that's a big red flag of just concern that one has to have in portfolio construction. But likewise, you want to look at you want to put the blinders over the politician and you want to look at the policies in place. Okay. >> So, that's where I'm saying when we're talking about Europe and we're thinking about defense and energy, you don't have to know anything about German politics. You just have to know they're a giant manufacturing base of a country who has to solve a massive problem. And if they're going to deficit spend their way into stimulating the economy to like solve this problem, there's going to be money to be made. >> Okay? And so, policy should inform some of those. You can be tactical with policy decisions so long as you depoliticize your view. Uh you talked about deficit spending and you I know you've interviewed some folks that are like MMT sympathetic. Uh >> sympathetic. >> Uh I would love to know in terms of economics how you view the last five years in terms of this newfound willingness to spend in fiscal. Um, one of the things like as you mentioned the 2020 how we had an expansion in terms of uh valuations in this in the private sector. I think that that's very simple. You can explain it with fiscal spending. The reality is the fiscal government's deficit is the private sector's credit and it's like all you have to do is look at the actual accounts and you can see it. I was wondering where you stand on understanding those things in in terms of the fiscal debate. Is there an accident coming? Like are we have we become too comfortable with deficit spending? And do you worry that all those folks that you know that used to warn us about the the the worries about inflation and and bond market the bed have all seemed to be the biggest proponents now of deficit spending and have completely forgotten their old views. And do you worry that it's going to bite us just when no one's expecting it? >> It's going to bite us. I don't think it bites us probably as soon as the fear it warrants. This scares the crap out of me. I'll explain what I mean by this, but I do think I do think 2020 was a real eye openener because in 2020 we got the fiscal stimulus that all the Kugman's and the Bernanes and the Cash for Clunkers program couldn't deliver on coming out of the GFC, >> right? and everybody, all those guys were saying, "We need fiscal and monetary together if we're going to move the needle on this." And that was where all the inflation was supposed to come from and why it didn't show up. And that was also where a lot of the growth potentially was going to come from to help heal this thing. Neither pro nor anti- policy in that as a stabilizing mechanism to do it. But for some reason, it didn't happen after the GFC in 2020. >> Oh, for some reason, we all know what it is. Tea Tea Party and everyone hated Obama. If it was a Republican in in power, it probably would have happened. >> Yeah. >> Right. Okay. >> That was the push back. Otherwise, we would have bigger programs. I don't think we would have had programs of the size that we got during the pandemic, though. >> No, I completely agree. The pandemic allowed really crazy things to happen. Anyway, I interrupted. Keep going. >> No, this is it. It allowed crazy things to happen. And the worst part of it is it's like the person who's never gambled before and walks into the casino and wins on the first hand. Every This is my my counter generational theory, whatever explanation that I think is really important that I just this just sits in the back of my throat choking me all the time lately. Those those boomers, they get a they get a deservedly bad rap in a lot of categories, but they were raised by depression era parents or people who went through hard stuff and they're I'll spend the interest. I really don't want to spend the principal, but I will. Not going fiscal kind of felt right to them for the most part. And then they got to do this fiscal stimulus. they got to do the stimulus that was the size relative to relative to GDP was the same size as what we did during the Great Depression during World War II coming out of it in the amount and quantity of money that was spent and they went whoa that worked pretty well and now they're not the problem though because they still have the fear of their elders in their DNA. The problem, dear Gen X and millennial friends, is that we have now watched them get to do stimulus and have all the goods and the next generation of politicians, I fear, just warn learned the worst lesson of gambling, which is they won on the first hand and they thought that that was skill and something that they can replicate and pull off to their own to their own great reward. And I am genuinely genuinely scared that we've now learned this lesson of what fiscal can do and we haven't overshot it in the other direction yet. >> And I do think at some point >> you don't think we've I >> Can you put the toothpaste back in the tube at this point? >> No. No. But you don't feel like we've we've overshot it. Like I I might argue and and I >> are we in a depression? >> No. But I would argue that the fact that we haven't gone back to 2% in inflation is the fact that it's very simple to me. it's that we're spending too much. And I've always like this is my problem with the MMTers is that you know and I am very MMT sympathetic and I think that explains almost all the plumbing issues. So I I'm a huge fan there with you on this. >> Yeah. So I'm a huge fan, but I always my push back to them was during the 2020 they said there, you know, a lot of the old school economic people told us that they can't the government can't spend their way out of this problem. And I always said no, if they have the they have the actual will, the political will to do it, they can do it. And and I always said the government is never financially constrained. It's always real resource constrained. And up until the point when no, you know, before all that spending, there was lots of spending to be had. And once we had inflation, it showed we overshot it. And this is the problem. And I'm sympathetic to the people who push back on MMT and say the problem is that once you teach people this, they won't stop. And I think that's what's happening here. And this is what I've always argued is that and and you know, we're at 3% inflation. And you know, the the Republican uh le Fed chair is trying to argue that we should have lower rates, right? And and not only that, the Republican president is running a 7% deficit to GDP. This is this is the good times and we're running this and it just like it's insane. So you you said in there though you think it's going to take longer for those you know those that those chickens what is the the roost to come back or whatever like basically >> the roost. >> Yeah. So why do you feel that way >> when WY Coyote runs off the cliff? >> Yeah. >> He doesn't just fall. >> If you or I ran off the cliff we would fall. But Wy Coyote, he gets out 10, 20, sometimes like 50 yards and then he has to hold a sign up. A sign. I don't know how far out over the canyon we are. We are out. We have wy coyoted off the cliff. Nobody's held a sign up yet. I don't know if they're going to, but Acme and whatever is gonna break our poor little road on our hearts out here, I I just think that that can continue further than we appreciate because I think the juice from stimulus is so strong that until some >> we need not just one thing to break, we need two or three things to break. And this is true of every crisis. One thing does not create the crisis. Markets basically go up on a string of news and we don't have a bad market, a bare market, a recession until the bad news just won't stop showing up. >> Okay, >> we have not seen anything like unrelenting bad news basically since the GFC in this country. Even what we saw during COVID, that was a microcosm of of the day after day after day where you check the screen to see how far financials were down that day because keep splitting the difference to zero, guys. Let's see what happens. We're wy coyotes out over the cliff. That's all I can tell you. >> That is awesome. Um, okay. You want to talk or I want to talk as well about private equity and private credit. Tell us what you see from your vantage point. um as an allocator, as a person that talks to people in terms of where the mistakes have been made, and I know you're going to allude to the fact that too many people have exposure to the same things over and over again, but talk more as well about the whole volatility laundering, as Cliff Asnice says. I would love to get your your viewpoint on that. And then finally finish it up with is this like the is this the thing that's going to drag the wy coyote down? Like is this going to be the the the final the brick that they're the anvil that they hand them that is going to cause the gravity to finally kick in? >> Oh, Acme, you're just waiting out there for us. I want to make sure we talk about both of these because I think they're both really interesting and important to actually put some nuance on. So, let's talk about private equity and private credit separately because I think they both have a place. >> Let's let's start with private credit because I think that's I don't think people I did an exceptional interview with Mark Rubenstein. Have you had Mark on before? Right. Net Interest >> Mark you get those guys that are that are more cerebral than us. >> We get guys that we get guys that just compare >> Yeah. We got guys to compare wy coyote running off the cliff. >> This is true. I would never be a guest on my own podcast, >> right? They wouldn't take you. >> They wouldn't take me. Would never make it through the filter in there with the crypto scammers and the junk email robots. >> So Mark explains and this is this is such a fantastic point. He's been a financials analyst since the 90s and he ran a long short fund through the GFC. He got involved in some other funds and stuff in the period both before and after, but he just understands the plumbing of the banking system better than anyone I've ever met. And Net Interest is a Substack. Wonderful, wonderful read. Absolutely worth checking out. And talking to Mark about this, the history of this industry, I think, is just really important to understanding what it is and how we got here. A super highle version is basically in the GFC, we constrain bank lending. You're a middle market company. a bunch of those loans, mezzanine debt, all that stuff basically changed how you could do that because we had to protect banks balance sheets and we said now for you guys to be in this special isolated class too big to fail you have to let go of this and so this cottage industry crops up in its wake and it's basically an unregulated banking entity and private credit is born out of investors saying oh I can make this loan okay the bank won't do it I can charge a little more interest. This sounds like a good business deal. And as more entrance came into the place in the period, especially in the Zer period post GFC, we saw a lot of people, a lot of capital get attracted to this. And as capital gets attracted to it, you start looking at other things to make it better. You know what makes everything better? Leverage. Of course it does. Why would leverage make anything worse? And so we start figuring out these clever ways. And really over the last 10 years, this has sort of fast-tracked where you have this giant unmet lending need inside of middle market companies and you now have a private credity credit system that can lend money to all these entities and basically say we'll do it on some leverage. So you can go out used to be you were a family office or you were an institution and you go out and you say okay let's give a million dollars to this private credit manager. They issue a bunch of floating rate notes or loans. You got to do your due diligence on all these things because stuff gets weird fast. And they go, "Okay, they're going to get us five, six, seven percent. It's floating. When they lever it up, I got 10, 11, 12." And what that started producing somewhere in the ballpark of 10 years ago is returns that literally just go up and to the right >> with no draw down or almost no draw down. >> Here's 10 or 12% a year. You know what'll make your uh fixed income allocation really sexy, really good, really, really strong. better than junk bonds. Hear that? Better than junk private credit allocation. And so we started getting those things. Now here we are, another one, big gift to the industry. COVID happens, don't really have to mark any of that stuff down. 2022 happens. Bonds get basically punched in the face. They do the wy coyote out onto the cliff and come down as much as stocks. Terrible year. But guess what doesn't go down? Guess what saves a lot of fixed income allocations across family office or raas or other people who are allocating this space? Private credit, >> right? >> Because your bonds got sucked. But this thing didn't budge and it put up like eight or 10% on that year >> income. Like it wasn't just flat. It was actually up. >> Uh you know what? I'd have to look back at the like you'd have to pull up the Cliff Water benchmarks or some of the other ones that are more reputable benchmarks to reference off of. It could have been a flat year, but generically speaking, on a relative basis, >> it was huge. >> It was bigger than huge. It was one of those outlier things where you own 10-year treasuries at the right point through the GFC and you went, "Hey, look, one positive number on my screen." >> Right? So that volatility laundering aspect of not admitting that a lot of those loans were in trouble or that was scary during that period basically says for the last three years now the amount of money they've been able to raise off of what happened during the 2022 cycle has been bananas. So two years ago, we have a lot of exposure v via a handful of different managers and a lot of it's like legacy exposure that people have had and we started in due diligence meetings to come up with some weird bad somebody's talking you through loans and you go, I didn't know you guys did uh vehicle financing. It's like, oh, we just got into that. Well, tell me a little more about the vehicle financing. Well, it's more motorcycle financing. Oh, that's interesting. I watch Sons of Anarchy. What kind of motorcycle financing? Well, they're kind of subprime motorcycle loans in uh South Korea, you know, near the border. Like crazy stuff like this. Really? Yeah. We start you start firing managers because you go, if if you're letting this happen, there has to be some other shenanigans that are going on in this portfolio. >> The stuff you're telling me about. >> Yeah. because every follow-up question led to a slightly more crazy sounding thing where again I've seen this movie before. We need to get away from it. So, you know, my director of research would come back from a meeting and he'd say, "We got another weird one." And we systematically started just firing and exiting a bunch of these managers. And this starts in that period right after 22. So like 23, 24, the quality factor on a bunch of these managers starts declining. And that tells us that loan standards had dropped. Too much capital had come in too fast in the push because again these are providing liquidity to middle market banks in the firm in the form of loans and notes. When those standards drop, you get some middle market bad actors that are looking for silly things like motorcycle lease financing at the subprime credit >> on the North Korean border or the South Korean border. >> Yeah. some absolutely just please keep me as far away from this as possible unless you're the mob in which case we need a different arrangement. I don't want to be a I don't want to be part of this situation. >> So private credit fills a lending need in the economy that we actually have no other source for. >> Okay. >> So I don't think private credit just goes away. I don't think private credit is at the grandest statement bad. The problem is we have an unregulated banking entity basically functioning inside of the United States and abroad. And if you're not doing extreme due diligence on who your managers are or how you're allocating to this, it's like buying a regional bank that's doing all sorts of batshit crazy stuff. That is the risk if you don't ask the question. However, if you took all of private credit and it's a multi- trillion dollar industry right now, you would lose a multi- trillion part of the banking system, >> right? That's not a viable solution. It's really important >> now. But but to your point though about too much money came in there and chased it. Um >> does the wash out cause enough problems that it actually affects the economy. >> You need three things to happen at once. You need three things bad in a row. You can't just have one bad thing. We can't have first brands or one of the other ones blow up and have a headache. We need to have a couple of these companies get sucked into a bigger scandal, a bigger problem, and then have an So, if we had, let's not use data centers. Let's, let's say we find out all of a sudden one of them is financing a bunch of Medicare driven nursing homes and all of a sudden the crackdown on employees in that space heats up again. We have uh a rolling over in the unemployment numbers in that space. Now there's not enough people to staff them. Now, Medicare is cutting funding, which Medicare just did. This is another big policy announcement in the last u it was made a while ago, went into place a few months ago. It's causing all this stress in that space. So now, if you have a bunch of lenders to people in a place where we see a downturn, that can spread because now we have a bigger problem that's impacted in two or three areas stacked on top of each other. These one-off things suck. Some people lose money, but it's it's like a hedge fund blowing up, >> right? If you have your money in it, this sucks and it's no fun, but it's insulated, >> right? >> Stack a few of these things on top, you could have a ripple effect that takes way more down with it. >> Okay, so at the beginning of this conversation, you asked me to you asked to separate the private equity and private credit. You talked about private credit. Let's talk a little bit about private equity. >> You take the equity risk premium and you do that same thing. Everybody's favorite thing, the best, most beautiful thing in all of finance. You lever it up. That's all private credit or private equity is just that's what private credit is too. You're just le levering up the equity or the credit risk premium to get something. This is why private equity on paper should do as well as if not meaningfully better than public equity because it's private. So you get a little liquidity premium but more importantly you lever it up. >> Well, let's just stop there. >> You used to get a little liquidity premium or discount. You used to get it at a discount. used to buy the private companies at a discount and now they're actually overpaying and they'll pay more than what's in the public market because of the volatility laundering. >> Do you agree with that statement? >> I do agree with that statement. I should have been more careful in the way that I worded it, but I agree with that statement because you don't have to pay the public market valuation for something that doesn't trade as much. So, you get it on a little bit discount and I was calling that the ili liquidity premium. You get to earn that little gap when you're making the purchase. >> Yeah. Now it just and that's the part that just boggles my mind, right? Like I understand why it used to work like when Mitt Romney did it back in the 80s. They were buying companies at a discount. They'd buy something at five times earnings, lever it up, you know, fire a bunch of people and then hold it for five years and then, you know, sell it back out. And it made sense. They were in essence. >> Yeah. Look how well Toys R Us did. Jeffrey the Giraffe is the Jeff Bezos of toys today. Right. So you don't worry though. >> So here's I'm actually more worried about private equity than I am private credit. >> Okay. So explain to us why. >> And this is where it's less on the portfolio side. I So if you own private equity, you have to understand these evergreen structures and if they're selling into those or if they have any chance of an exit. It's really really important socially, society, on the policy front. We're watching talking to a guy that we work with and he's like, "One day you wake up and you realize you're the last private equity guy rolling up the last HVAC company in, you know, rural Arkansas or something." >> Yeah. >> What do we do when we've privatized all these companies? What do we do when my my own dad like with his aiology practice basically is like selling it? He can't find anybody to take it over for him. It's not a great business. It's not a terrible business. It earns a decent margin and okay return. It's an attractive thing, but it's more attractive for a private equity firm to go in and say instead of finding the the person like you who's 30 years old and wants to take this over someday, how about you just sell it to us and give us the money and now we'll be okay. We could manage this. We can lever this up and squeeze some stuff out of it. I think this is part of where smalltown America, main streets or whatever, this is why they all look the same. This is when I when I drove we drove my wife and I from LA, you know, out to Joshua Tree for a vacation some months ago and you're passing these shopping malls and you're just looking and you're going, "This is the same thing we have in northeastern Pennsylvania." >> Here I am in the BBS of LA and it is identical. The only difference is on that drive at least one maybe two sizzlers. Was very impressed. Thought those were gone. Almost stopped. Didn't but thought about it. >> I don't believe you. I don't believe you. There's there's at least one if not two sizzlers between LA and Josh Street. >> I don't believe you didn't stop, buddy. You can tell us you didn't stop, but we all know you stopped at the sizzling. >> Still got on my shirt. >> Yeah. So I I think private equity represents a whole other existential risk that we are just basically turning this over into these entities who will volatility launder who will show them. I don't know if they're going to be able to earn the returns that they used to by levering up that equity risk premium with the kinds of stuff that then are now stuck adding to. I think that's another one that's the five and 10ear forward risk because I also think about the Mitt Romney. Well, now you got Mitt Romney's equivalent of kids running these businesses. They don't have the same ladder in front of them that Mitt Romneyy's generation had in front of them to do this business, but they are there in these institutions that are now expected to put up these numbers going forward. That is a scary ask of the American population to say, keep building and making companies that you can sell into private equity. Then private equity can turn around and flip on the public. That's >> they'll just put them up in the in the cage above the car. Um the clients, that's what they'll do. Uh >> it's brutal. >> You're very good that you don't laugh. You don't say anything. You just kind of smile at my joke, my political joke, and don't piss off that side of your clients. Okay. Um >> bail of religions, man. You can't go out there and sell. >> That's right. Matt, you are just an exquisite interviewer. And before we start talking about your personal life and all the things that we'll have the rest of everyone hitting the non-market people will stick around, but all the market people will hit stop. Let's let's finish off with a question about the markets. If you were doing this interview, what would have you asked yourself that I missed >> besides what is the meaning of life or something? >> No markets. I want a market one. We're going to get to the meaning of life shortly. >> Oh, Christ. Good. Good. I'll uh give me all the names. Um >> so, so like what's on your mind that you would you kind of worry about or or that you feel like we should have discussed from a markets perspective? >> This is the the Kevin the Kevin Weir question. Paint me the picture of a bullish outcome for this year. I want all these IPOs. I want all the private credit fears. I want all the political stuff where the government whether or not we have the blue wave or not, what's the outcome? What's it look like where markets put up 10 or 20% this year and next year? I want the no recession bullcase like you are the Republican who just came back from the Birkshire meeting and you're subscribing to to SpaceX. What's the valid version of that argument in your head? >> Well, I'm I'm asking you, so you have to give it to me. I'll give it to you, but I want to hear yours too on this one because I think everyone is so bearish right now and we see this on excess returns in our comments. We put anything out that's remotely positive and the commenters just jump down our throats. They lose. I'm actually surprised about that because I see a very different uh and it just shows you the maybe you're skewing by who's listening to your show because to me it feels like when you talk to civilians people >> my clients are optimistic. Yeah. It's the podcast listeners who are not. And it's jarring how wide that spread is right now. >> Right. I I can give you I'll let you go first but then I'll give you mine and we'll see how we differ. like have you made you're saying make me make like give me the bull argument and and how it plays out is in essence what you're asking >> because I think the bare case is pretty easy to make because we can point out all the categories that are faltering or problematic or scary right now and I have no problem laundering out that list of dirty shirts. >> Okay. But but on the other side of thing, I think there is a pervasive and we can't understate this enough and maybe I'm just spending too much time with Ben Hunt, but there is a pervasive positive narrative from the companies have all learned the playbook on how to job own not just earnings, which is the old game. >> 80% of companies beating earnings and you learn how to set that bar and make sure that you're positive outside of an economic contraction. You got to make sure you beat and then even when you go into one, you got to reset. So you make sure you're beating. I think we have changed the way that CEOs and executives communicate what those corporations do. I think the public has caught on to when we invest, this is the way that we should think. And I think we can defy we can defy reality for probably a more extended period than people give it credit for. Back to WY Coyote again. Yeah. >> I genuinely believe the narrative of not looking down could make us defy gravity for longer than people expect. And that's where I don't think you can just go all the cash or go hide out and do something else. You have to be open to this as a some percentage on the table. Okay. Uh if I was forced to come up with the bull argument, I would go back to my belief about fiscal deficits create private sector credits. And I would look at the fact that we have this situation where love them or hate them, Trump has forced the rest of the world to start spending. And so if you look as an aggregate of the fiscal deficits that we are experiencing, they're monstrous. And you can that's scary in terms of inflation and eventually we're going to run out of capital. But until you get to that moment where you're actually gonna get people in and the other problem that is about that situation is what if we have financial repression l Russell Napier like what if they just say no we're just going to leave we're going to do YCC and YCC then all of a sudden you have this uh kind of scarce ability to take that money and put it somewhere and so they're going to chase equity. So to me that would be the crux of my argument is that the fiscal deficits are going to continue and as long as the fiscal deficits are going to continue then the private sector's credit is like that's the private sector's credit and the earnings are going to keep going up and I'm you know a little mad at myself in terms of missing this or not missing it but getting too nervous about it. I keep believing Trump when he says he's going to balance the budget or, you know, or or pull it back in or do the Doge and it just, you know, here we are and we're still running a 6 and a half% deficit or whatever it is. So, that's mine. Okay, listen. Let's get into some fun stuff now. Um, so for all the non people that are just want markets, you can tune out. Thanks for tuning in. You have got one of the most interesting backgrounds I have ever heard of someone in the finance industry. Uh why don't you tell us how you a little bit about your journey like where did you grew up? You already alluded to the fact that you didn't sit at the you know table talking about stocks and bonds and that you grew up in a very different household. Tell us where you grew up and uh how you ended up here. >> So you're familiar with the television show The Office? >> Yes. >> So Scranton, Pennsylvania is right up the street from where I grew up. I grew up in Wilsberry area about Yeah. That's our sister city right there. city is a generous term, but for two towns on the river valley. And as I like to remind people who have no idea about this, so Scranton was really, really important. And this does tie back to The Office because basically The Office and Kingpin. You know the movie Kingpin? >> Yeah. The bowling one with Woody Harelson, right? >> Remember when his life falls apart and he's the crazy landlord lady? >> Sorry. Yeah. Yeah. >> That's okay. When his life This is a common theme of my area. The office helped a little bit with this, but the place I grew up, Kingpin, when his life falls apart, he moves back to Scranton. The lady with no teeth on the hill is pretty accurate. So, Scranton a long, long time ago is the home of the first transcontinental railroad. >> When the country was built, the railway started out of Scranton and runs across the entire country. the whole highway system infrastructure for the northeast comes through basically like Scranton and then the Harrisburg area, all the trucking companies that were built up down there. And what you basically had was Scranton was where the rails ran out of. It's called the electric city because that's where all the coal came from the the Wolsberry area. We were called the diamond city. They were the electric city. And we got all basically the coal and the steel from the Allentown and the Bethlehem an hour and a half down. that's where my mom is from. That would come up here, get financed, put on the rail cars, the West is built. And that works really, really well as a theme until basically World War II when all of a sudden the area that I would then grow up in, not until the 80s, but the area I would grow up in becomes one of the most recessed places. It traps multiple generations and it is just dark, dismal. This is the rust belt story, >> okay? And it's not just in the American South. Like this is this is what this was. >> Yeah. >> So I I say all that because I grew up in this place that's basically recessed even if I don't know what that word means where all the highways overlap. I'm two hours in two hours I'm in New York City proper. I'm in Philadelphia and we're just in this weird little recessed corner of the world and in a hotel. This is important because this is foundational. There's a hotel in downtown Wilsberry, no longer there. was called the Hotel Sterling. The hotel was abandoned as responsible teenagers. We never ever went into the abandoned part of the hotel and saw the giant marble staircase and the crackheads sleeping on it and whatever else. We never did that in case my mom is listening at this point. But in the first floor there was a coffee shop where bands would play. It's mostly like punk rock and metal and hardcore and folk and everything that was going on in the early 90s. And I remember going there with friends in the outside front in the hallway of this old hotel that had a presidential suite on the top four floor. President's not coming to my area often. Joe Biden is from Scranton and there is a road they renamed the Biden Expressway that I laugh at every time I drive fast now. But there's a reason even he left. But in that club, I learned in my nent teenage years that you can get on stage and you can get up there with your friends and you can make enough money to go out to Perkins or Denny's or whatever afterwards and girls might like you and you can have some fun and this is way better than what you can get on the sports team and this is way better than what you can get in the after school club and this is the coolest thing ever. So from my early teenage years on, I started playing music. I started putting bands together. I started traveling because we had access to all these places and we were a tour stop for all not the giant bands, but like all these punk rock and hardcore and interesting weird things that you and I have talked about in the past, too, >> right? >> Huge entrepreneurial learning lesson on basically how to hustle and make a buck when you're 16 years old and you don't want to be working construction over the summer, which I did it once. Wasn't wasn't fun. So, you're a rock and roll star in essence and for how long do you do that? >> So, I should add what the one other detail inside of that because this takes me all the way through college chasing this this dream and this ambition. Yeah. >> Is when I'm in high school, remember the scene in Back to the Future where he calls up, hey, it's your brother, your cousin Marvin, and he's like playing, you know, and his >> the Chuck Barry scene. >> Yeah. Yeah, for sure. Yeah, I know. >> I always think about it. It wasn't this glorious, but it was like that. So, one of the one of the band teachers that I know, him and a bunch of other the other like area band teachers and some professional musicians and other people, they all had this band that they played in as adults. And I I had gotten to be a pretty respectable guitar player and had a little bit of a reputation as like a 15-year-old as being pretty good. Yeah. >> And he knew me from school jazz band and stuff like that. And so, the guitar player in their band breaks his hand or something one weekend on his job. Yeah. >> And so this guy knows my family, knows my mom, and he's like to my mom, Marge, he's like, "Can I know this is a weird ask, we've got to play this, you know, this bar gig or something. I need a guitar player. Would you trust me to take your 15-year-old son for the night and he'll be paid well for it? I think he could do it. I think he'd have a good time. Would you trust me to do it?" So, I find myself in my teenage years also moonlighting with the next youngest guy in the band's like 25 or 30 years old. Again, they're all professionals. So, I spend probably at least a night a weekend, many of Thursday nights. I have funny stories about running into teachers and bars and stuff like that. Playing bars, weddings, and corporate events all over the tri-state area with all these professional musicians. >> Wow. >> Where I'm not allowed like I can't sit at the bar. Like everyone, they're like, "He can't come in here." and they're like this negotiation. He's he can't leave the stage or if he does, he has to go sit in the back room. So now I'm sitting in the back room in a corporate event and I'm reading the writer and I'm asking these questions as a sober 16-year-old now, you know, >> why why do we own the van in the LLC? Oh, you got to do that for liability. Why do I get this tax form for these gigs but not these gigs? You know, oh, this is how we keep the do offer back, >> right? I'm learning all this stuff, but I don't realize it has any value. It's just part of it. And I start taking all those lessons to my own bands and my own stuff so that we're in high school. It's like, and by the time I'm in college, it's like, oh, let's start a record label. We'll do that for distribution and we can funnel money through this entity to do this other thing. Oh, you know, I'm I'm in college and I'm interning at a recording studio. And the person gets an offer to go out on tour and it's, hey, you're actually a pretty put together 20-year-old. will you take over this and run this while you're still a college student while I'm gone for the next two years? >> Wow. >> And these are the things that start to happen. So, I keep having people, you're good at business, but I don't know what any of that means. I've told this story before. So, I'm in college working in recording studios, running a record label, touring, doing a bunch of stuff like that. And all of a sudden, what I don't realize is Napster has happened in the early 2000s, >> right? The personal computer has now upset the entire recording studio landscape. And I don't understand that the industry I'm in is getting disrupted. >> Okay. >> When when I talk about like the kids of Mitt Romney working in private equity that think this ladder is in front of them and they don't know yet that that ladder is not there, this is what I'm experiencing in the music industry at 22 to like 25, >> right? because all of a sudden the couple of contracts that I'm getting to record an album or doing something are like slimming and trickling because people are like, "Oh, I can do that part in my home studio and then go to the New York City studio to finish the project." And now nobody wants to come to greater New England where I'm operating out of. And I'm going, "This was a business five years ago. Why is this not a business anymore?" And I don't understand it. So I'm paying the bills by recording the 15th terrible rap demo in a row. And the guy had two lines. I've told this story before. I don't know if I've told you this story. >> No, I don't. I don't think I've heard it. >> All right. So, the first line the guy says, I'm like, there's a redeeming quality here. So, there's something he's on to. He basically explains that he has more hoes in the back than a firet truck. It makes sense. It's logical. It's funny. It's clever. I'm all in. I'm in on this guy. But then then he says something about I'm gonna shoot you in the calves like Cleveland and I'm having this moment where in my brain like that it's the the Louiswis Black thing where he's like I know where aneurisms come from. It's the time he's in line at Starbucks and somebody behind him says if it wasn't for that horse I never would have made it through college. And then he turns around to ask what? They're not there. And because that question can never be answered. He's going to die. So this guy says, "I'll shoot you in the Cavs like Cleveland." And I'm like, "So the Cleveland Cavaliers, I get it, but the Cavs on my leg and why am I being shot?" And like the job wasn't fun anymore. >> Yeah. >> The thing I loved all of a sudden was I I was just so distressed over the only way to pay my bills is to take care of stuff that I don't even know if this is art and this isn't fun. >> And I started talking to people. I was like, I think I have to get out of this. I have to do something totally different just to clear my head for a while. And people kept saying, "You should do business. You know business. You're running a business. You're doing this." And I'm going, "No, I'm not. I never took a business class or anything." And so I translate the business advice to go get a job in finance. And I apply for a job as a part-time teller in a bank. And this is in 2006. And I get that job and I'm terrible at it. I can't balance my drawer. I'm just confused. I last two weeks and they're like, "You seem like you know how to you talk to the business owner people when they come in. Come sit on this side." >> And I start doing the personal banking and the business accounts. I start getting involved in retirement plans. They're like, "You should be on the management track." And I'm going, "I don't want any of these people's lives. This is just a pause until I go back to music." And I realize though, I need insurance. I need blah blah blah. Like, I'm starting to try to be an adult. Yeah. And I'm looking around the office and there's one person who doesn't look like he hates his life. No offense to the many delightful people that I worked with. And I go, "If I'm going to do anything, maybe what that guy's doing. What's he do?" And they go, "He's a financial adviser." Like, I don't know what that is, but I'd like to learn because that's the only thing that looks like it might be fun here. And I become a financial adviser in basically 2007, just in time for the world to try to end. And there's a whole traumatic story inside of that. But I didn't care. And I thought I was going to leave or quit this whole thing until that happened. And I realized in that moment all these people who said they knew what was was going on and were teaching me and explaining me all that stuff. When you walk down an aisle in a Meil Lynch office and you see the guy who you've been told ever since you got there, that's what you aspire to. That guy makes more money than a professional athlete. That guy does this. That guy does that. And you walk by that corner office and he's got his head in his hands and he's crying. You go, "What just happened?" They go, "Well, he sold his uh his mother-in-law Fanny's and Freddy's and they got zeroed." And you go, "None of these guys making all this money know anything? I have a chance in this business." >> That That's where I came from. >> You're telling me there's a chance? That's what you were you were your favorite Dumb and Dumber moment there. >> You're telling me this? Yes. It was truly a Dumb and Dumber moment, but it was also the part where all of a sudden I cared and was interested in markets and what was going on because that took over that just took over all of the attention. And when I was because I was working in that business, it just made it all the more fascinating. I didn't have a lot of clients obviously at that point because I was brand new. And I just figured out a way to scrape and survive through that first leg of things and going, I want to figure this out. I want to understand this MMT stuff that people are talking about that's not being implemented and why are they not talking about it. Totally sucked me in. The nerd side of me took over and that started this journey. Uh I saw you know when you were I was reading your introduction you said that you write every day and I actually grabbed one of your quotes and you says writing every day forces me to collect the things that make me curious and then connect them. Talk to me about that. And uh are you lit you literally write every single day? Like like and do you publish every day? Like is that there's something going out every day or is that just for yourself? >> So number one, I do publish something every day. I don't necessarily write every day. I make a note about something six times a day. I'm sure you do the same thing. >> The pattern matching of things that don't otherwise make sense until you batch them out. This is why I'm a Macrourist subscriber. I like people who chase lots of shiny objects and go down lots of rabbit holes and then go, "Oh my god, did you realize how these two things are related? That's the ADHD part of my brain and I can't I can't shut it off." So post financial crisis, I am just in pure like learning fascination mode. And one of the things that happens, this is when podcasts are relatively new still. you had to download them on the computer, drag the file onto the iPod. That whole thing is going on and um you're you're absorbing as much as you can. That's when the financial blogosphere was on fire. So, you were finding all these people. You discover someone with niche expertise around this area. You go all the way in and I realized I was just consuming so much, but it was really hard to complete a thought. Sometimes >> somebody would start to ask you about something and you're like, And back to the performance thing that's inside of me, I know that that sucks. If you ask somebody about it and they just ramble on forever, which I've now proven by rambling on about the course, but >> if you just do that, if you can't complete a thought, what's it worth to anybody aside from your own internal ego stroke? So about about eight years ago now, I decided I wanted to make sure I had at least one complete thought a day. And the way that I did that was I at the time because I wasn't allowed to publish anything because of my job and the compliance restrictions and whatever. Yeah. >> I created this was influenced by you know uh Shane Parish, Farnum Street, that guy. >> Yeah. Yeah. >> So someday I will tell him this. He and I have never actually met. >> Is he a Canadian? One of those guys is a Canadian. >> I think he's Canadian, but then he ended up in the US because he worked for CSA or something like that, right? >> Yeah. I I always get Okay, go on. Sorry. >> Do you know what his first website was? The first iteration of Farnum Street? >> No. >> This This has always stuck with me. It was It was just It was five numbers and I don't remember what they were. It was just five numbers and that was the web address. And the five numbers that he picked, it was the zip code for Birkshshire Hathaway. Really? And so he deliberately made an unfindable website with this one little nugget of a clue of one of his personal interests. That's how he picked the URL. >> Okay? >> And he didn't expect anybody to find it. But Farnum Street is born out of this weird writing activity that he didn't expect anybody to find, but he wanted that accountability for himself to put it out there. >> So my idea was the same. I was like, I'll just steal that playbook. I want to have a complete thought. if I just put it in my phone or in a file on the computer, it doesn't feel like I put myself on the line. So, I committed to start making sure one post a day and at first I would write them in the morning and put them out that day, but I made a series of unfindable websites where I accumulated them over time of one complete thought a day >> and I would talk about whatever. And there's there was some finance stuff earlier on that was mixed in there, but there was a lot of pop culture or other things that I saw as tangentially related. So, if I want to relate pulp fiction to whatever Mark Zuckerberg policy just got announced at Facebook, there it was. But at least I completed the thought, >> right, >> in a few hundred words in many cases. And I've carried that through and that's turned into now cultish creative. And I'm I I'm whatever the AI tool I use to help me manage all this stuff with the the mail the mailing list account and whatever else every day it's an intimidating number comes back. It's congratulations on your 2,800 whatever streak. Well, I want to see that. Uh for a while when I was starting to write the macro tourist and I took it a little more seriously, I said to myself, I'm going to have to get better at it. I'm going to write every single day no matter what. I just forced my like the Beatles, you know, playing twice a day in in Hamburg. Like that was how I viewed it. And I just if I was like some days I'd be like, "What the hell am I going to write about today?" And it was >> doesn't matter morning pages style. You just got to sit down and let something start coming out. >> Get something out. Yeah. Um >> but the curiosity of the overlapping of interests like the networking of ideas. >> Yeah. >> I see that as one of the most valuable skills in the modern era and one of the most important things. I know you do it. Again, this is why I subscribe. This is why I've read you as long as I have because you will take all this disperate stuff and you're not going to force a connection, but you're going to play with a bunch of stuff and you're willing to be wrong over time, whether that's with a trade or a market call or just just a view on things. Ideas develop and if you have a written record that you can now go search and heaven forbid somebody shows you how to use some AI tools to look at some of this stuff now and go back, it's it's amazing. Listen, one of the reasons that I like you so much is your views on happiness and um just choosing, you know, to smile and uh you know, I always say when people say, you know, how's your day? I go, it's great day. I'm on the right side of the dirt. Um >> every day above ground is a good good day. >> Exactly. And I I'm going to quote you here. Happiness is something that you have to make for yourself. You can't just consume it or wait for it. It's about creatively engineering your own joy by reconnecting with what makes you curious and fulfilled. Talk to us a little bit about your um attitude towards happiness because I think it is something we should all aspire to. I think if anybody's ever been sad or depressed or life has kicked their teeth in for a while and I go back and forth on if I think you have to go through that, but I I do think there's a little bit of an inverse proportional relationship to how much stuff had to suck at some point for how much you can appreciate the small things. You know what's the quote the enjoy every sandwich? You know that quote? Oh, the Warren Zeon quote when he was on David Letterman and and David Letterman asked him, you know, like, "What did you learn?" He goes, "Well, I enjoy every sandwich all the more now." Right. >> I think there's there's really something to that. And I see that I see that in my professional work when I'm given advice and I I take this very seriously. I've I've seen some dark days. I've seen some rough stuff in my life. I've been I've been down about things and it just sucks. It sucks to stay there. And I've seen people who get stuck in that trap and who just stay there. And what happens is if you don't have some sense of your own curiosity, you can't climb out of that hole. And the world's not a boring place. I feel like I walled up a lot of stuff. So from 25 to 35 when I was trying to figure out the finance thing, I was singularly focused on trying to figure out this finance thing and make a little money and earn this chip on my shoulder back by what didn't work out in music. Oh, okay. >> And I was so in the hole that I didn't have the same because like leaving music and going into finance, I didn't have a bunch of friends that I was with doing the same thing from college on. All these relationships, all this other stuff fell apart. So, I felt really really isolated for that period of time. And it wasn't until I till I started writing online and sharing it, even though I was sharing it anonymously that I started to realize not just how rich my curiosity was and stuff that was going on in the world, be it new music, be it whatever, streaming and stuff like that helped that out a ton, but then taking the time to think about it, you start to go, "Oh, wait. This makes me happy." Then you start to talk to people. You start making friends. I started making friends again and hanging out with people and actually like I I was with a therapist in like my late 30s and and I'm telling her about all these problems and all these stresses and all this crap I'm going through in my life and she's like, "Matt, who are you talking to about this? This is an important question for me to ask. Who are you talking to about this?" And I looked at her and I went, "You. I am paying you to listen to me talk about this. What do you mean? What even kind of a question is that? Isn't this like your professional oath? She was like, "No, no, you actually have to share this stuff with other people. This is how relationships work. Give and get. It's not all transactional. You pay me for this." And I went out of that I literally went out of that session with this therapist and was like, "Okay, I guess I got to I got to talk to some people about what's going on in my life." And my relationships with a couple of friends went way deeper after that moment. >> Oh, that's nice. You are responsible for this. You have to choose. It is a conscious choice. The most important thing is the conscience choice to do things that'll make you happy. And I think the more important one is choosing curiosity, not just the end state. Because if you just choose satiation, like you could stare at your phone all day long and you know catch all the Pokemon on Pokemon Go or whatever makes you happy and that's that's a route to nowhere. Instead, what you got to do is find something that you're going to wake up and be like, "Huh, you know, I've been reading the Bible and re-watching The Wire. There's some weird stuff going on there." Speaking of which, I rewatched the entire Sopranos the other day. And I, you know, I always loved the show. I did not appreciate how good it was from the very start. Soprano comes out the gate, Sopranos comes out the gate really, really strong. And same. So, I'm actually thinking about that one might get bumped up to rewatch list. Wife and I are re-watching The Wire right now. We're into season three. I a forgot how strong out the G. So, I've been thinking about The Sopranos in particular and the contrast to Breaking Bad on this is just how good kind of how different the first seasons are, but just how freaking good they were strong. the ground. >> The wire is one that everyone tells me I have to watch and I try it and I try one or two episodes. I find it just like like I'm not a prude and it's not like swearing bothers me, but it's just literally just one fbomb after another and I'm like and and I got I know I have to stick with it and I'm kind of embarrassed. I've never watched The Wire. >> So, because you enjoyed The Sopranos, you have to see the next natural extension. I share this to you as a as a storytelling nerd because I know you'll love this part of it, too. The genius and the brilliance of The Wire is it's a lot like reading five back-to-back novels. >> Oh, okay. >> Like each season you got to approach like a novel. And the hardest part about it is you have to treat the city of Baltimore as the main character, not the actual people that you're being introduced to. >> It is wildly overwhelming to just dip in and out of that show. Because in season two, I think my wife said, in season 1, she was like, I think it took me four episodes to just figure out who everybody was. And in season two, she was like, I think this one took me seven. And this is the genius of David Simons and Ed Burns. >> Every season takes a different structural look at the city of Baltimore and something else that's gone on. >> So, in season one, we have the cops versus basically the gangs. >> Yeah. Yeah. >> And so you have the kids running the corners and you have the cops and you have this giant wiretapping where the show's theme comes from, the name, the wire on how they're going to get information on these these the drug trade in town. We get a deep focus. Season two, we find out where the drugs come from. It's all about the ports and it's all about the unions and really it's about the people who are the second generation in who saw the glory days who are now in the the troubling spot and how they're having to cut deals with the people who are ultimately importing drugs and other stuff into the city and how it destroys the generation below them. >> Okay. >> And then by the third season we're back into what happens when all the drug guys from the first thing start getting out of jail and now trying to take over their corners again and the police are worried about a re-election cycle. Fourth season you get the schools. Fifth season you get the newspaper and it is just a full deconstruction of Baltimore as the character as it evolves through. It's when I say it's genius, it's amazing. And on the rewatch, the Easter eggs are just it's like they'll talk about a character for three three episodes until he shows up. But just one comment in an episode here and there. >> By the way, >> that's the same way with um Sopranos. When you watch it again, you'll be like, "Oh my god, I like I didn't miss that. You didn't even see this the first time. I I love that stuff. >> So, let's get to um the part where I ask you some questions in terms of uh some fun kind of personal things. I'm going to start with the speed round. >> Speed them up. Let's do it. >> Okay. Speed round. Here we go. Speed round for Matt. Number one, Duran Duran's Girl on Film. Girls on Film. An underrated or overrated 1980s hit. Oh, it is a I'm going to say it's fairly rated, but it by by standards of how many people know this and beyond hungry like the wolf and forget their I think they did an unplugged. I think they did a bad unplugged for some reason. But by all means, Duran Duran deserves way more respect than they get in the modern era. We should celebrate them. >> Your the best musical instrument. >> What on what scale? >> You just tell me. You pick it. >> The best question. the best musical I mean the best musical instrument is probably the piano because you can do everything. It's a string instrument masquerading as a percussion instrument where you can literally play the entire musical register. It's by far the most versatile of instruments. It's got the problem of you can't take it everywhere with you. So I'd put guitar in a near second place because similarly you can do most of it with transportability. But uh the piano has to take the cake on being the most important. >> Do you play the piano? You mentioned the guitar. Do you play the piano as well? >> I so I putts around. We grew up in a house with a lot of instruments scattered about. I can putts around with everything. I am not a piano player by any extent of the the words, but you know, my my go-to soundcheck song like in bands when they'd be like, "Can you go over and sound check the keyboard? I'd play uh there was the Beck song, the the song off Olay." No, there's one with the there's iconic Roads riff at the beginning. >> Oh, okay. >> I had a handful of licks that I had and that was one of them. I was always kind of amazed at like Paul McCartney being able to play all the instruments. Like he supposedly dubbed in for Ringo when he wasn't there. He played guitar, he played bass, he played piano, all these things. Are you similar? Can you play everything? >> I can mess around with everything. I can't mess around with read instruments or so basically like saxopones, like trumpets. I can't do that stuff because I never learned the the amisher for how to do it. >> But in my house, I played guitar. We had bands. We would rehearse in the basement. we would play. So there was always a guitar and a bass and my brother played drums. So there was a drum set down there and we'd keep we had a piano in the living room and a piano a keyboard downstairs a lot of the time. And you're bored. It's the pre- internet era. It's Saturday afternoon. You don't have school. You have a gig at night. You have nothing else to do. You go down into the refer to it as like the shed call practicing. Like you go in the woodshed, you pick something up. You're bored with your instrument. So you go, I'm going to tinker with this. and you have a weird understanding from the other way you approach it on a main instrument and you just play around and see what you can do. >> This is a little >> and that's very normal very normal for I think people with access. >> Yeah. Here's a little weird tangent but I I was watching Rick Bat the other day and he was talking about how in essence anyone can record like at levels that used to be require like million-doll studios. is is in some ways the world flattened for musicians. >> Yeah, that's that's the story of me not understanding macro disruption >> in my own life, which I think about this way too much now. But that was what I experienced was the beginning of that in the early 2000s with the advent of the personal computer and then forget it when GarageBand came on the scene with when Apple introduced that. That was the beginning of the entire demo process coming onto a consumerfriendly platform where all you have to do is press play. And there was a bunch of presets where even if you were recording into your crappy laptop mic, >> yeah, >> it would do two really weird pieces of music technology trivia that are worth mentioning. Do you have a Bose Have you ever had a Bose sound system or whatever? >> Like No, I've had the earphones had Yeah. Okay. >> Anything with Bose on it. This is the genius of Bose. They figured this out. I don't know, 30, 40 years ago, they basically figured out how to take a little crappy speaker and trick your ears into an entire frequency range that's not there. >> Oh, really? >> So Bose is just a mathematical trick, probably forier analysis or some weird thing that I don't understand because I was never good at math. >> They basically are tricking your ears into hearing a fuller frequency spectrum than is actually there >> and it's a genius move. Same thing with um you know autotune. You know what autotune is like share and all that stuff? Tea Pane. I know you're a big Tpane fan, I'm sure. Um, do you know what autotune was originally designed to do? >> No. No idea. >> Natural gas. It was designed for fracking. >> Come on. Antas, I think was the company who ended up taking it. So, what it was is you would send these shock waves down into the ground and do like the mapping of the ground, but it was all about frequencies and vibrations and then correcting for them. And some brilliant person realizes in early ProTools that we can make a plugin, that's what they were called, a plugin in the box in the computer where we can take this technology for finding and matching pitches and we can just kind of gently nudge them up or down without manipulating the the quality of the voice itself, >> right? >> Low coder style. We could tune this thing in. Came from the fracking industry. >> Does um, by the way, you will understand this. I don't know how autotune works. Does it take a scale and then just put the whatever the closest note is that you're singing and and move it to that thing or or do you actually put a melody over the over the the the points in the song? >> So, I'll generically explain a point that'll oversimplify it. So, don't confuse uh a vocoder with autotune. So, a vocoder, think like a melodica, like the thing you you um you have a keyboard >> like a melodica. Uh, Roger Troutman from Zap, like all that stuff where you hear like the voice through the keyboard. Peter Frampton on Peter Frampton comes alive doing the >> big new documentary coming out. >> I'm sure that's going to be interesting. Um, interesting guy. I mean, giant pseudo live album, whatever. The the idea with the vocoder is I can play the notes, I can play the scale, and it'll just manipulate my voice through the microphone, through the device to then manipulate them to whatever I'm playing on the keyboard or whatever. >> Right? >> The vocoder is close to what autotune is doing, which you might say, I'm singing a song in the key of C. >> Yeah. >> And now it's going to recognize that scale on the harmonic spectrum that's there, and it's going to notice, h when you said that E, it was a little bit flat for a major third. We're going to just nudge that up ever so slightly and correct there. >> And you can manipulate the in between area. That's where like T pay does all that crazy stuff. That's how they're doing it. >> Speaking of using the tool, >> um like uh so there's like their half steps, right? Usually a guitar is at a half step. How about that crazy French Canadian band that's playing the guitar that's got more that got quarter steps. >> So this is >> What's the name? What's the name of them, by the way? I can't remember. Ober. Oh, it's Ober. >> What's the crazy video with the >> Yeah. >> Yeah. It's pretty wild. The visual representation there. Yeah. Get the name because >> Yeah. Everyone's gonna need to know because if you want maybe it's not Ober. Uh, anyways, you tell us about that while I'm looking this up. >> So, we arbitrarily took the musical world and said, "Here's how we divide up the notes." That's an arbitrary measurement. It's just like taking a ruler and saying we're going to make 12 inches or whatever your fancy equivalent is you non-metric person you or you metric person non-metric bastards. So the scale is basically arbitrary and we have a long history of Indian music and multicultural music around the world that takes advantage of uh not just half steps but quarter steps and more micro divisions of like an octave is fixed. >> Yeah. >> There's there's C and then there's C. Right? >> You can divide that up into as many steps as you want. >> Closest thing like you have in American pop music or in jazz. You see the guy with the upright bass. The upright bass or an unfriended instrument that has all those notes because the octave is still there. >> You can divide it up into all sorts of different ways. >> Our ears aren't designed to hear melody that way. So that's where it feels a little disorienting or off when people hear stuff it that way the first time. I think that's what's going on with this band with these. >> It's called an angene de and I think it means heart attack or something like that. >> Yeah. Well, and they are a visual heart attack when you see >> Anyways, folks, go have a look at that the fast day stuff. Okay, let's get back to the speed round because I'm I'm doing um your favorite dark comedy. >> Oh, my favorite dark comedy. I mean, oh, I know I'm gonna I'm going with Heathers. I'm going with Heathers. >> Oh, deep cut. Deep cut. I like it. Best Canadian band. Oh. Oh, this is hard. I'm split on this one. I'm not gonna say not gonna say the the obvious one. And I'm gonna go with Propagandi and The Weaker Thans. >> Oh, nice. Guy after. >> Like the Weerans. >> I love the Weaker Thans. Unbelievable band that's underrated. And they're from my hometown. >> Even Even better. A Plea from a Cat Named Virtue is one of those songs that every now and a bad day got to hear. >> You know what's really cool about that? Like Frank Turner this, you know. >> Oh, love Frank Turner. >> Yeah, Frank Turner. He thinks that like he's obsessed with the weaker than he's >> one of the great modern acts. They are >> Amen. >> Okay. Um, what part of Idiocracy that has come true has surprised you the most? >> I don't think I'm surprised by anything in that movie. I think about that movie and how much I need to rewatch it on possibly a daily basis right now, if not a weekly basis. The amount of times I've cited it, the amount of times I've appealed to the genius of Mike Judge and said he's he's our unforeseen like messiah of culture. >> Yeah, it really is awesome. And you know, President Kamacho and he's a a wrestler and now we got the UFC fight. Like it's just it's like it's happening all the time. >> We are living in idiocracy. Copy over. >> It is just awesome. And you know what's funny about that movie? So I I you know have these pals. I sit on this desk and I I come in. I'm new to the group and I tell them about this great movie that they got to watch, right? Because they nobody had watched and I come back like a week, you know, after the weekend and I say, "Who right, who watched it?" And like literally like four of them had watched it. Three of them had tapped out, had not made it past 20 minutes, wondered what the hell I was, you know, who the hell this guy was recommending this terrible movie. The fourth guy went out and bought the DVD cuz he loved it so much. And I was like, "That's my boy. That's >> that's how you know who your people are. It is one of those movies that first watch I was like this is fine. It's fine. That was my my initial reaction when that movie came out was this movie is fine. And then it haunted me and I forget the first time that I was going this is very Idiocracyesque and I rewatched it and I went this is a little disturbing. Are you a Neil Postman fan? Have you read Neil Postman stuff? >> Neil Postman wrote Amusing Ourselves to Death and Technopoly. Those are the must-read Neil Postman books from from the 80s. He basically predicts he's talking about TV taking over >> and how radio to TV is rewiring our brains and what's going to happen next. He basically predicts social media in the mid 80s. >> Wow. Okay. >> And that's one of those things that it ages worse with time because it keeps being more right. And I feel the same way about idiocracy. It's a little too precient for me. >> Oh, that's funny. Okay. Um, Conan or Letterman? Oh, this is a hard one. So Conan's my generations, Letterman's my dad's. I grew up watching Letterman. The the top 10 lists, all that stuff is near and dear to my heart, but the sheer shenanigans of Conan of that team are way too much of my sense of humor is a blend of those two men. >> Okay. Um, if you could have written comedy for any sitcom, what would it have been? >> So, actually written or just been in the writer's room? Give me both. >> Okay. Okay. Uh, if I could have I could have only hung in the writer room because I would have loved to been there at the beginning of the Simpsons. >> Oh, yeah. >> Like when Conan was there. >> Conan. Yeah. >> Smiggle. All like that like crossover from the SNL people who ended that Simpsons early stage. I think I I would like to be there. If I could be in the writer room only because it's just too close. Any Kevin Smith movie. >> Oh, okay. Yeah. >> Um, tri-state area. That's my every time Smoddcast, one of my favorite podcasts of all time for the reason I've got the book of the transcripts back there because it sounds like my friends and I talking to each other in the most surreal of ways. >> Okay, got it. Um, what would you like everyone that's listening to this take away from your life experience? Sappy one to finish it here. >> Okay. Yeah. Be curious about something. Don't be boring. Don't be miserable. It's a choice to show up in the world and be a kagon. So, just go have fun. Life is so much fun. There's so many things that are just enjoying en enjoyable and silly and goofy and right down to, you know, we're sitting in the local bar, restaurant, whatever the other night and we we're all excited because there's an AI commercial for some company on and it's Idris Elba in it and we're at the bar and we're like Strigger Bell. Life is fun. >> It doesn't take much. All that matters is the people you spend time with. It was part of why it was so much fun to spend time with you today. This is the highlight of my week. >> I am I feel exactly the same way and I'm sure everyone else does and I just want to thank you for spending time with us. Why don't you tell people about your firm, your podcast, give us the whole spiel, where they can find more of uh Matt Ziggler, Dirk Diggler extraordinaire. >> So if you want the full boogie nice treatment, >> yeah, >> I'm not going to give anybody the boogie. So the um for Sunpoint and what's important to know about Sunpoint is we work with everybody from institutional clients and family offices all the way down to people who are just starting off or uh that might mean you need investment consulting services. That might mean you just need a financial planner. And we work with a lot of people especially in the industry and around the industry who go, "Yeah, I'm really good on the investment side. I'm solid with this, but uh I I haven't really finished that estate plan. a little worried about this thing or I'm gonna take this job with this new family office, but we got to set up these entities in like the Cayman Islands. How do I navigate the operating agreement and the ownership agreements and stuff like that? And we do a lot of that contract work, too. And it dovtales in everything that that we do. And that's part of the reason I'm at this firm, the reason I'm I've joined this firm and I'm interested in running strategy there is because we get to see the whole scope. So, if you need financial help on any of this stuff, we have context. We put it there. The reason the excess returns network and stuff like this is so important to me is because I use stuff like this for all my clients. I make these connections. It's valuable. So that's that side of the house. I'm doing a lot of work with Ben Hunt and the epsilon theory guys over at Panoptica. Percion is the entity. Panoptica is our public facing thing. We're doing this really cool series right now called epsilon theory unplugged. Uh Ben wrote the first note. Brent Donnelly wrote the last note. I know he's a fan. Somebody you've had on before. Yep. >> I've got Rusty doing a note coming out next. Adam Butler, have you done Adam Butler on this? >> No, I haven't had Adam Butler. >> Should get Adam Butler of Resolve on this. Grant Williams is in there. Dave Nodding's in there. It's like a murderous row of creative people and we talk and this chat and we're writing stuff and making things. The cool thing about that one, see the world through stories. All that's on there. I'm writing about stuff usually every week or every other week just saying how you can sort of put some of this stuff into practice. Somebody in my shoes. And last but not least, Cultage Creative. That's personal brand. That's me making wacky connections. I literally was thinking about I'm reading this. I'm going to get it wrong. It's the guy who did the graphic novel of the Flintstones. That's really this like meta commentary on capitalism. He re he rewrote the entire Bible. When I tell you it's the funniest thing I've read in a long time, I am having the best of times reading the Bible every night before bed. Tell my wife it's like it's like going upstairs. got to read the Bible. Having my Bible study, but I'm I'm watching that and I'm watching The Wire and I'm thinking all these overlaps and I'm going, "Oh, this is there's a post or an essay coming out of this." That all happens at Cultish Creative and then my other many podcasts just press record, which you are coming on at some point. >> I will for sure. >> I do blind introductions with people that I think should meet that otherwise would not end up on a podcast and I just decide to start recording them and that's literally my favorite thing I do. >> Oh, that's awesome. Listen, Matt, I've enjoyed this so much. Uh, it's great getting to know you a little bit better. Everyone, please go support Matt. Go find uh all of his different endeavors. And remember, just go have fun. >> Go have fun. Thanks, Kevin. >> Thanks,